Brazilian Stock Exchange companies performed better in the first quarter of 2021 than before the coronavirus pandemic.
According to Economatica’s calculation, 262 companies listed on B3 added a net profit of R $ 83.3 billion in the period. This is the highest value for a first quarter since 2018, when the same companies had a net profit of R $ 90.7 billion in terms adjusted by the IPCA, the official inflation index in the country.
The pandemic brought down companies’ results in the first quarter of last year – many companies were affected even before the coronavirus arrived in Brazil, at the end of February, especially exporters. In the period, the group analyzed by Economatica added a loss of R $ 65.5 billion in real terms.
This year, companies benefited from the resumption of the global economy in a combination of low interest rates, injection of liquidity by governments and central banks and a rise in the dollar and commodities, which led to record profits for some companies.
According to Gustavo Akamine, an analyst at Constância Investimentos, in the case of commodity exporters, revenue grew about 50% on average compared to the first quarter of 2020, also driven by the lack of stocks and the economic recovery.
Taking into account the Ibovespa companies – the main stock index in the country – as a whole, the increase in revenue was less expressive: from 10% to 15% over the same period last year.
“The mining and steel, paper and cellulose and oil sectors had very strong results, given the shortage of innumerable inputs due to the pandemic outbreak,” says Akamine.
Vale, the most valuable company in Latin America, had a record profit of R $ 30.5 billion in the first quarter of this year. Santander also broke a record, with a profit of R $ 4.012 billion in the first months of 2021.
In terms adjusted by the IPCA, Vale’s profit is the second highest for a first quarter in the history of publicly traded Brazilian companies, according to calculations by Economatica. The mining company loses only to Oi, which, at present values, profited R $ 35 billion at the beginning of 2018, with debt reduction after approval of the company’s judicial reorganization plan.
According to João Leal, economist at Rio Bravo Investimentos, the first quarter was driven by two factors: a much stronger and more resilient economy than expected, especially in consumption, and the global economic recovery, which also favored commodity prices, benefiting large number of exporting companies.
“In the first quarter, we were still in a scenario of very low interest rates, rising commodities, a recovering foreign economy and a resilient domestic economy,” says Leal.
“In the beginning of 2021 we expected a technical recession in the first half, which should not happen again”, says the economist.
Banks and the government have expanded their growth projections for this year. According to the latest Focus bulletin from the Central Bank, Brazil’s GDP (Gross Domestic Product) is expected to grow 3.45% this year.
“Companies should also favor the reissue of fiscal measures that will give impetus to consumption, such as emergency aid, BEm [programa de corte de jornada e salário ou suspensão de contratos de trabalho] and anticipation of the 13th of the INSS “, says Leal.
If the pace continues, 2021 could be a year of several record annual profits, according to analysts, but the outlook is still uncertain.
“The beginning of the year was a very good picture for commodities, but it will not necessarily be repeated. It depends on the outside, whether China and the United States continue to recover, and whether the dollar remains high,” says Akamine.
Another factor to be taken into account is the population’s immunization rate against Covid-19.
“It is expected that, with the vaccination, the activity in the second semester will accelerate, which should improve the results of domestic consumption companies and banks”, says Jardel Nogueira Oliveira Lago, economist at Valor Investimentos.
So far, the biggest annual profit that a company has achieved in Brazil, in real terms, was the R $ 64.7 billion that Petrobras recorded in 2008 – in that year, the oil barrel reached more than US $ 100 a barrel; today, it is US $ 66. Vale has the second position, with a profit of R $ 63 billion in 2011. Both companies take turns in the first 18 positions in the ranking of the highest annual results made by Economatica.
Analyzing the Ibovespa, the first quarter of 2021 was the fourth best of all quarters of the last ten years, in real terms.
In this survey, made by Quantum Axis, 28 companies were considered that were present in the index in all quarters since 2011.
In the first three months of this year, they added a net profit of R $ 73.6 billion. The best result is that of the last quarter of 2020, which, in real terms calculated by Leal, totaled R $ 172 billion.
Next are the first and second quarters of 2011, with R $ 87.5 billion and R $ 88 billion, and the second quarter of 2019, with R $ 82 billion.
Another survey by Economatica, now with 307 publicly traded companies in Brazil – not all with data for the last ten years – shows that their profit in the first quarter of 2021 is R $ 90.2 billion, against a loss of R $ 62.9 billion in the same period of 2020.
After Vale, Bradesco’s second highest profit in the period, with R $ 6.15 billion, followed by Itaú Unibanco, with R $ 5.41 billion.
Oi, still in judicial recovery, has the biggest loss in the period, of R $ 3.50 billion. Azul registers the second largest, with R $ 2.78 billion. Both had sales impacted by the pandemic, but managed to reduce the gap compared to 2020.
Along with the vehicle and parts sector, the transport and services and telecommunications sectors were the only ones with losses in the period.
The transport and services sector is the one with the greatest percentage drop in sales (12.18%), followed by telecommunications (11.84%), rental properties (10.02%) and education (9.10%) .
The sector with the highest sales volume is food and beverages, with R $ 134.8 billion, a value 30.88% higher than in 2020.
Despite the favorable results, the Brazilian economy as a whole still does not show the same level of recovery.
“The fact that these companies are listed on the stock exchange already makes them winners, with a leading role in the sector in which they operate and do not necessarily reflect the economy as a whole,” says Akamine.
Since the end of 2020, economic activity has been decelerating.
“After a recovery during the second half of last year, the worsening of the pandemic should impact activity in the first half of 2021. In contrast, the advance of mass vaccination should allow for a resumption in the following semester,” says an XP report.
According to the broker, despite the challenging macroeconomic scenario, profits should continue to recover strongly. The bet is on advancing vaccinations and on the economic reopening.