Banco Bradesco Stock- Malls Reopen as Brazil Quarantine Begins to Ease; Deaths Jump
Shoppings malls have started to resume activities as some states and cities in Brazil relax quarantine rules. About 40 of more than 570 commercial centers are already back at work, according to local media.
The crisis created by pandemic has laid bare opposing views in Brazil’s government in terms if a post-coronavirus agenda. While the Economy Ministry says the country needs to resume its reform and privatization program, the Chief of Staff’s Office announced a 10-year plan focused on public investment as part of the recovery process.
The latest data from the Health Ministry shows coronavirus cases rose to 49,492. A record daily toll of 407 deaths pushed the total deaths to 3,313.
Here’s a summary of the latest measures taken by Brazilian companies:
April 23: Malls reopening; concessions
BR Malls reopened two shopping centers with reduced working hours and Iguatemi sees partial reopening, in shifts when authorized. The sector’s national association expects the majority of shopping malls will have resumed activities by May, said Estado newspaper. Renner will begin gradual reopening of some stores on April 24. Allpark Estapar went ahead with its IPO plans, saying it intends to sell 28.6 million shares.
The Attorney General’s Office said federal airports and highways operators have the right to receive a compensation due to the effects of the pandemic on business, said Valor newspaper. The privatization of state-owned utility Eletrobras might be on hold until 2021.
The government may purchase plane tickets in advance to help airlines during the pandemic, Infrastructure Minister Tarcisio Freitas said in a webcast.
Brazil is seeing a drop in demand for fuel and electricity, Energy Minister Bento Albuquerque said. Petrobras is holding diesel and gasoline auctions to get rid of high inventories amid demand slump, said Valor.
Car-rental company Unidas approved a share buyback program, reinsurer IRB Brasil halted its guidance for 2020 and tourism agency CVC hired Itau B(BA) for a possible capitalization to support sales growth expected in the next months.
Steelmakers CSN, Gerdau and Usiminas had their outlooks revised to negative by S&P due to coronavirus impacts. Scania will resume activities at its Sao Bernardo do Campo unit by April 27, said Estado, while Mercedes-Benz will temporarily cut hours and wages for its employees in the same city. Honda extended the suspension of activities in two plants until June 25 and Volkswagen froze new investments in Latin America.
April 21 and 22: GPA, Utilities
Pao de Açucar had gross revenue of 21.6 billion reais ($4 billion) in the first quarter amid a strong increase in Brazil sales. Citigroup is joining local banks and BNDES in a 17 billion-real rescue of the nation’s power sector, people familiar with the matter said.
Utility Energisa postponed 500 millions reais in investments scheduled to 2020, and Eneva ended negotiations with AES Tiete. The government is studying extending hydroelectric concessions and BNDES postponed the majority of sanitation auctions to 2021, said Valor Economico.
JBS reduced production at a beef facility in Alberta state, Canada, and CEO Gilberto Tomazoni said there might be a cut in meat supply depending on the number and the size of plants shut at the same time.
Embraer said it’s mulling extending the deadline to close the deal with Boeing, originally set for April 24.
PetroRio’s CEO said oil would need to prove sustainable above $40 a barrel before the company could unfreeze capex, while Reuters reported the state of Rio de Janeiro is in talks with Pimco to keep the asset manager from demanding the immediate payment of loans tied to oil prices.
Lender Itau will grant a grace period of as much as six months and total maturity of six years for some credit lines, according to Valor.
Truck and bus manufacturer Marcopolo partially restarted two more units, while Volkswagen said unions approved a 30% cut in hours and salaries for 90 days.
April 18, 19 and 20: JBS in U.S.; Vale
After JBS had seven employees with Covid-19 in its hog-processing plant in Worthington, Minnesota, the company announced indefinite closure of the facility. The firm also announced it will resume activities in its beef plant in Colorado by April 24. Miner Vale cut its iron ore output forecast for the year to 310 million-330 million tons from 340 million-355 million tons.
Petrobras will cut gasoline prices by 8% and diesel by 4% at refineries. Oil futures dropped below zero for the first time with May contracts expiring amid economic turmoil caused by the coronavirus. Petrobras said its aware but hasn’t been officially notified about a temporary labor court decision, which forbids the company from applying measures to reduce personnel wages and shifts. The government aid to utilities, automakers, airlines and retailers will be released in May, said O Globo newspaper, citing the CEO of BNDES.
Retailer Via Varejo is studying how to renegotiate rents of its physical stores, according to Valor. Domestic and international air travel demand fell 33% and 42% respectively in March from a year ago, said Folha newspaper citing data airline regulator Anac.
April 17: JBS delays reopening in U.S unit; Petrobras, Cosan
JBS delayed to Monday the reopening of it beef plant in Pennsylvania, initially scheduled for yesterday. Meatpacker Marfrig hasn’t been affected by Covid-19 crisis, said the firm’s Latin America CEO.
Petrobras’s CFO Andrea Almeida said deleveraging target became “a lot harder do meet” given the scenario of uncertainties. CEO Roberto Castello Branco said the company has suspended imports of diesel, gasoline and other fuels, with the exception of LPG imports. Oil regulator ANP is analyzing orders, most of them from Petrobras, to cut the equivalent of 200,000 barrels per day, the agency’s board said during a videoconference. Fuel giant Cosan said diesel sales fell 25% in last four weeks, and demand for aviation fuel dropped as much as 80%, compared to the same period last year.
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Nissan signed a deal with local unions to grant one month of mandatory vacations to workers of the Resende city unit, in Rio de Janeiro state, while Honda and PSA Group extended the suspension of activities in some factories to May 4 and May 31, respectively.
The government wants to use the pandemic to cut electric sector subsidies, said Estado. Two shopkeepers associations are asking malls to exempt rental fees when operations comeback to normal, Folha newspaper reported.
Sanepar said regulator suspended rate increases for 60 days.
April 16: sick BRF employees; Retailers, banks
Meatpacker BRF said that six of it employees were confirmed with Covidni brazil-19 in different units, but reaffirmed that operations are running normally — though a labor union said the firm is negotiating conditions in case it needs to cut production. (BA)“/>Petrobras will idle 62 shallow water rigs, reducing output by 23,000 barrels per day, while the CEO of stated-owned utility Eletrobras said it’s not the best timing for firm’s privatization.
Private lenders have joined national development bank BNDES in a consortium to design a package of about 50 billion reais ($9.5 billion) in aid to companies, local media reported. Itau and Bradesco will be the first to lend through guaranteed notes, said Estado, after Central Bank allowed the measure.
Retailers such as Magazine Luiza and Via Varejo have renegotiated rental contracts with warehouses, while cosmestics group Natura advised executive comitee members to reduce their wages in 20% until June, according to Valor newspaper. Homebuilder MRV defered launches and has been struggling to turning client interest into actual sales, the CEO said. Airline Azul hired strategical and legal advisers to help minimize the impact of the crisis.
April 15: Mother’s day, utilities, Gol
Retailers study posponing Mother’s Day to July 12 from May 10 due to the Covid-19 crisis, O Globo newspaper reported. Energy regulator Aneel is against helping to utilities via bank loans due to potential impact on consumer’s bills, and sees alternative from using about 23 billion reais tied to research and development programs, said Valor Economico.
Airline Gol closed a deal with Boeing about cash compensation and cancellation of 34 orders of Max 737 planes. Azul has been talking to Brazil’s development bank BNDES for financial support and credit lines, but there isn’t a formal proposal yet. The company said that hedging losses won’t pressure its cash in the near term.
Boa Vista also halted its IPO.
A federal court temporarily suspended an order that had forbidden telecommunication firms to halt services because of unpaid debts during the pandemic, said Estado. Health-care companies Intermedica and Amil have suspended the sale of some insurance plans, according to Valor.
Fiat allowed new clients to start paying debts only in 2021, while BMW extended the suspension of activities on its units until may 4.
April 14: IPOs deferred; payroll loans
Brazil’s Banking Federation, known as Febraban, is mulling extending the debts of payroll loans, Folha newspaper said citing the entity’s president. In March, the federation had taken similar measure about other type of credit. The government may release a new credit line for micro-entrepreneurs of about 10 billion reais, according to Valor newspaper.
Pet shop chain Petz and homebuilder Pacaembu suspended their IPOs plans. State-owned lender Caixa might postpone the IPO of its insurance unit, initially scheduled for the first half of the year, to 2021, and bring forward the share sale of its credit card unit, Valor said.
After Embraer had concluded the negotiations with workers in the majority of cities where firm has a unit, the company said it signed a deal with the metallurgical union of its main plant in Sao Jose dos Campos city to cut wages, hours and halt employment contracts. Airline Azul’s founder and controller David Neeleman sold over 80% of his preferred shares in the company after a margin call was triggered on a $30 million personal loan.
Suzano announced the donation of 50 million reais to help authorities combat Covid-19. The funds will be used mainly to import 159 respirators and 1 million hospital masks that will be distributed to states and municipalities where the company operates.
April 10, 11, 12 and 13: Petrobras proposes installments to gas distributors; Embraer deal
Stated-owned Petrobras proposed gas distributors pay in installments from April to June to protect the sector’s supply chain. The oil giant also halted activities in two oil platforms after workers were diagnosed with coronavirus, and told unions that operations in six others will be suspended amid already announced production cuts, local media reported.
A worker from JBS’s Ipumirim plant was hospitalized with Covid-19, according to the local union. The meatpacker will close its beef facility in Colorado through April 24 amid the outbreak of the coronavirus among employees and neighboring communities.
Bank Itau Unibanco announced a 1 billion-real donation to combat Covid-19 and its effects, while Bradesco said it may increase provisions.
Embraer reduced working hours, wages and halted employment contracts for as much as 90 days while also agreeing to guarantee jobs as activities resume. Renault extended the suspension of four of its units until may 3, while General Motors factories will be closed for another 60 days with salaries of workers cut by as much as 25%, Folha newspaper reported. Truck and bus manufacturer Marcopolo will partially restart activities in Caxias do Sul city, and Randon approved a share buyback program.
Telecom regulator Anatel asked the government to postpone the 5G auction, said O Globo newspaper, and told companies to do not halt services because of unpaid debts amid the pandemic. Public and private banks negotiate lending about 17 billion reais to utilities, according to Estado. Sao Paulo allowed water company Sabesp to readjust tariffs, but deferred the date they come into effect to June 10. Malls manager Iguatemi granted a 50% discount on March debts to tenants, said Folha.
April 9: Petrobras halts dividends; Fresh aid
Petrobras canceled scheduled dates to pay 1.7 billion reais in dividends relative to 2019 earnings, while Shell Brasil said its production plans were unchanged amid the Covid-19 crisis. Vale provided 521 million reais in early payments to small and medium-sized companies as part of an initiative to support suppliers amid the pandemic and extended the care and maintenance period of Voisey’s Bay mine, in Canada, which will impact copper production by as much as 6,000 tons. Airline loyalty program Smiles canceled its guidance for 2020.
Executives at paper producer Suzano said the firm sees higher sales on rising tissue demand amid virus and has robust liquidity and will not fire workers during pandemic. Retailers Via Varejo and Renner may cut hours and wages, following Magazine Luiza, which had indicated earlier this week that will do the same, while shoe maker Grendene is negotiating the temporary dismissal of most of its 18,000 employees, said Valor Economico newspaper.
As a protection to banks provisions, the National Monetary Council allowed lenders to reclassify credit lines that had been or will be renegotiated during pandemic to the risk level they were at in February.
Health regulator ANS freed up about 15 billion reais to health-care providers by softening the use of guarantee resources, but established conditions, such as the renegotiation of clients’ debts. The government waived energy bills for the poorest and allowed tourism companies to postpone the reimbursement to clients as trips and events have been canceled.
Azul’s cargo unit revenue grew 13% in March, compared to same month of 2019, with the increasing demand for air transport of health materials.
April 8: Magazine Luiza cut wages; B3 changes rules
Retailer Magazine Luiza cut wages of its top executives by as much as 80% for three months, will renegotiate contracts with suppliers and is raising 800 million reais through a sale of local bonds to boost its financial position. Cosan and Comgas halted their guidances for 2020 and Enauta and Eletrobras suspended shareholders meetings.
Without mentioning coronavirus, Petrobras approved an early retirement plan and adjustments to its voluntary redundancy programs that will provide 7.6 billion reais in gains by 2025.
The tourism sector lost 14 billion reais last month compared to last year, said Estado.
Stock exchange B3 eased some rules, such as an 18 months deadline to adjust to the minimum free float required amid buybacks. Energy regulator Aneel freed up 2 billion reais to distributors and independent agents, and suspended readjustments in fees that already had been approved in three states. Telecom regulator Anatel asked the government for a voucher aimed poorest population, Folha newspaper said.
The government will allow firms with tax debts to take credit and renegotiate payments during the pandemic, Estado reported.
While coronavirus lockdowns force people to eat at home and boost demand for Klabin’s products, the company is revising its logistics plan amid possible shipping disruptions ahead.
JBS confirmed that an employee who worked at its production facility in Colorado died from complications associated with Covid-19.
April 7: Airlines; JBS shuts down plant
Gol CEO, Paulo Kakinoff, said that talks with national development bank BNDES about the package aid to sector are promising. The airline suspended its guidances for 2020 and 2021 and announced a cut in wages. Competitor Azul reported a drop of 24.6% and 17.2% in traffic and capacity last month, respectively.
JBS suspended operations at a Pennsylvania beef plant until April 16, after several employees displayed flu-like symptoms. Embraer proposed suspending labor contracts and cutting wages by more than 25% in its Sao Jose dos Campos unit, according to the local union. Utilities are lobbying to get government aid, but energy regulator Aneel opposes that, said Valor newspaper.
The government may defend banks from an increase to 50% from 20% in the tax on profits known as CSLL, which has been under discussion in Congress, according to Valor. The five largest banks associated with the banking federation have already received 2 million requests, about 200 billion reais (about $38 billion), for credit amid the pandemic.
Itau Unibanco, Bradesco and 13 other financial institutions had their outlook revised to stable from positive by S&P in a similar decision announced on Monday for Brazil’s sovereign rating amid uncertainties brought on by the epidemic.
April 4, 5 and 6: Gerdau halts operations; “do not fire” movement
Steelmaker Gerdau will temporarily shut down blast furnace 2 in Ouro Branco and halt activities in several electric melt shops and long steel rolling mills across the country. Tupy will suspend all its operations in Mexico until April 30.
Brazilian companies from fuel distributor BR Distribuidora to brokerage XP Investimentos and lender Itau Unibanco pledged to not fire employees during the Covid-19 crisis.
The Central Bank established regulations for loans to financial institutions in order to improve liquidity in the market and the National Monetary Council temporarily barred banks from buying back shares without Central Bank authorization, paying dividends above the minimum legally required and increasing managers’ pay. Over the weekend, Economy Minister Paulo Guedes criticized financial institutions for not letting money freed up by the government flow through to companies and individuals.
Earlier, BTG had approved the buyback of up to 15 million of its units. Santander Brasil will automatically extend unpaid debts for 60 days to some credit lines, while Itau temporarily closed 400 branches, said Estado newspaper.
General Motors proposed suspending labor contracts and cut wages of 90% of its workers in its Sao Jose dos Campos city’s unit, according to local metallurgical union, and Honda extend the closure of its production lines. Burger King Brasil’s delivery sales haven’t offset its losses from closed stores, said Folha citing the firm’s CEO. Airlines and national development bank BNDES are disagreeing over details of the promised aid to the sector, reported Valor.
Embraer was dowgraded to BBB- and may be cut to junk by S&P. The ratings firm expects airlines to postpone the purchase of new aircraft until at least the end of the third quarter of 2020.
April 3: Usiminas halted activities; aid to tourism
Steelmaker Usiminas temporarily suspended all the operations at Cubatao Plant and halted part of the activities at Ipatinga Plant, as demand has been falling due to Covid-19 crisis. Homebuilder and developer You defer its IPO planns and retailer Via Varejo postponed their meeting shareholders.
Tourism Ministry will provide special credit facilities to companies and will allow then to postponed in 12 months the reimbursement to clients, as trips and events have been canceled, said the sector minister, Marcelo Álvaro Antônio. After Energy regulator Aneel barred companies from cutting services for lack of payment, governemnt is studying pay the energy bills of poorest people, reported Folha newspaper, citing Mine and Energy minister, Bento Albuquerque. Telecommunication firm Claro announced that some clients will be able to renegotiate debts and extend the deadline of first portion until 20 days.
Jet fuel demand fell more than gasoline, and diesel, which has so far been sustained by agribusiness, has also started to show significant decline, said Petrobras president Roberto Castello Branco. Stated-owned utility Eletrobras has 73% of workers in home office, according to it’s CEO. Giant meatpacker JBS announced it’s looking to fill 3,000 positions in Brazil, but said that they aren’t related to possible increase on absenteeism due to virus spread.
April 2: IOF suspended, layoffs
The Central Bank will be temporarily authorized to lend through guaranteed notes to financial institutions and the IOF tax on financial transactions will be suspended for 90 days, which may give a relief to local lenders. State-owned bank Banco do Brasil canceled it shareholders meeting and oil regulator ANP halted the 17th oil auction round.
Embraer proposed a layoff as well as wage and hours cut to workers of it’s main unit in Brazil, in the city Sao Jose dos Campos, according to the local union. The company said it is analyzing the situation to protect its employees from the spread of the virus and also maintain essential operations.
Oil-processing at Petrobras refineries in Brazil fell in February amid the impact on fuel demand, a trend that should hold in March and April as well.
Marfrig and Minerva halted output in Uruguay meat plants amid strike as workers push for safer conditions in the middle of coronavirus outbreak, according to a person familiar with the matter.
Car rental firm Localiza postponed an interest on equity payment, following peers Movida and Unidas. Burger chain Madero, which wants to do an IPO in U.S, fired 600 employees, Estado newspaper reported. Cooperative Minasul’s president said coffee shipments are running normally. ini
Homebulider Even approved the buyback of up to 2% of its shares. State-run Caixa will provide special credit facilities to real estate companies, Valor Economico newspaper said.
April 1: Shareholder meetings delayed; Petrobras cuts output
Petrobras doubled its oil production cut to 200,000 from 100,000 barrels per day. Fuel distributor BR Distribuidora will propose to delay a plannned increase on equity payments. BRF hired about 1.4 billion reais in credit facilities to strengthen its liquidity and is recruiting more than 2,000 people in Brazil and other countries to replace those who may be unable to work because of the pandemic.
Companies from Burger King Brasil to sugar and fuel giant Cosan and tourism agency CVC postponed planned shareholder meetings.
Fiat Chrysler announced some of its local units will temporarily be used by health authorities as medical structures. The automaker intends to resume production in Latin America on April 21, Folha newspaper reported. Toyota wants to do the same a day later.
Utility Neonergia will allow consumers to pay their debts in 12 months. Foreign banks have mostly halted funding to local lenders, Valor newspaper said citing the president of the country’s banking federation.
To see what companies did amid the crisis in March, click here.