Bloomberg News

Salfacorp Gains Most in Year After Profit Rises: Santiago Mover

September 04, 2012

Salfacorp SA (SALFACOR), Chile’s biggest construction and engineering company, posted its best four-day rally in a year after a jump in profit allayed concern about debt levels.

Salfacorp rose 4.6 percent to 1,010 pesos at 1:19 p.m. in Santiago, bringing the gain over the past four trading sessions to 13 percent, the biggest since August 2011.

Second-quarter net income rose 13 percent from a year earlier to 4.12 billion pesos ($8.6 million), led by real-estate sales, the company reported Aug. 29 after the close of trading. Before the announcement, Salfacorp had been the worst performer among members of the Ipsa stock index in the past 12 months, with a 43 percent drop.

“There was uncertainty on how the company was going to perform and its second-quarter results dispelled that,” Javier Gunther, an analyst at Santiago-based brokerage IM Trust, said in a phone interview. “Salfacorp also showed an improvement in leverage ratios.”

Salfacorp’s ratio of earnings before interest, taxes, depreciation and amortization, or Ebitda, over net financial costs rose to 3.22 times at the end of the second quarter from 3.05 times at the end of the previous quarter, according to filings sent to Chile’s securities regulator. Bond covenants require Salfacorp to keep a ratio of at least 3 times.

Fitch Ratings cut its rating for Salfacorp to BBB from BBB- in April, citing an increase in debt levels due to recent acquisitions. Santiago-based brokerage Celfin Capital said Aug. 31 that Salfacorp’s underperformance created a buying opportunity and “compelling entry point.”

To contact the reporter on this story: Eduardo Thomson in Santiago at

To contact the editor responsible for this story: Brendan Walsh at

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