SAO PAULO (Reuters) - Brazilian card processor Cielo SA (CIEL3.SA) on Tuesday posted a 33% drop in second-quarter profit from a year earlier, missing analysts’ estimates, as operating expenses surged and revenues fell amid fierce competition in the sector.
Net income came in at 431.2 million reais ($114.27 million), compared to a Refinitiv consensus of 491.9 million reais.
Operating expenses grew by 23% from the same period a year earlier, to 528.3 million reais, as the company spent more on general and administrative costs and hired 1,000 new salespeople.
Consequently, Cielo’s earnings before interest, taxes, depreciation and amortization (EBITDA) margin dropped to 26.7% from 29.6% in the previous quarter.
To compensate, Cielo has said it will implement a cost cutting program, expected to yield savings this and next year.
The company had lifted its customer base to 1.4 million active merchants at the end of June, up 5% from March and 14% above the level seen in the same period of 2018.
Competition among card processors got fiercer in April as Rede, the country’s second largest card processor, said it would advance payments to merchants in as little as two days, charging no interest. Cielo did not follow suit.
Reporting by Carolina Mandl in Sao Paulo; Editing by Matthew Lewis and Rosalba O'Brien