Bloomberg News

Redecard Shares Rise as Profit Beats Analysts’ Estimates

July 19, 2012

Redecard SA (RDCD3), Brazil’s second-biggest payments processor, rose in Sao Paulo trading after second- quarter profit exceeded analysts’ estimates on cost cuts and higher rental-equipment fees.

Redecard gained 0.9 percent to 33.30 reais today in Sao Paulo trading as Cielo SA (CIEL3), Redecard’s bigger rival, advanced 1 percent to 62.65 reais.

Recurring net income at Barueri-based Redecard climbed 20 percent to 388.1 million reais ($193 million), or 58 centavos a share, from 322.6 million reais, or 48 centavos, a year earlier, the company said yesterday in a statement. That beat the average estimate of 56 centavos by 14 analysts surveyed by Bloomberg.

“Redecard posted a better operating efficiency because of lower expenses and a significant increase in the average equipment-rental revenue of credit- and debit-card terminals,” Nataniel Cezimbra and Carlos Daltozo, analysts at Banco do Brasil SA, wrote in a report.

Chief Executive Officer Claudio Yamaguti, whose company may be bought out by Sao Paulo-based Itau Unibanco Holding SA (ITUB4), pared operating expenses 13 percent from the second quarter of 2011, led by a 28 percent reduction in personnel costs to 46.7 million reais, according to the statement. Average rent on the company’s terminals rose to 70.67 reais in the period, up 39 percent from a year earlier and 5.7 percent from the first quarter.

Total credit- and debit-card volume climbed 6.5 percent to 59.3 billion reais from a year earlier, the company said.

Itau’s Offer

Itau offered 35 reais a share, or 11.8 billion reais, in February to buy the 49 percent stake in Redecard it doesn’t already own. NM Rothschild & Sons Ltd. appraised the offering for minority stockholders, valuing each share at 34.18 reais to 37.59 reais, Redecard said in an April 5 regulatory filing.

Lazard Asset Management LLC, Redecard’s second-biggest shareholder with a stake of about 10 percent as of Feb. 16, asked for a new evaluation, saying Rothschild undervalued the stock. Credit Suisse Group AG conducted a second appraisal and valued the shares last month in line with Itau’s bid.

Itau reaffirmed its plan to buy Redecard after the second appraisal.

To contact the reporter on this story: Francisco Marcelino in Sao Paulo at

To contact the editor responsible for this story: David Scheer at

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