Balance sheet season begins amid Americanas case; see calendar

The season for financial statements of publicly traded companies on the stock exchange begins amidst the unfolding of the Americanas case, one of the largest and oldest Brazilian retailers that, on January 11, disclosed a material fact about accounting inconsistencies of R$ 20 billion in its spreadsheets, which resulted in the opening of a judicial recovery process and reported debts of BRL 43 billion.

According to experts consulted by the CNN the Americanas factor will make investors more sensitive to the company’s financial statements, in addition to turning their attention to those more sensitive to high interest rates.

The moment of retail slowdown and the strengthening of iron ore should also be on investors’ radar at the beginning of the year, based on the end-2022 statements presented by companies linked to these sectors.

On Thursday (26), Cielo began the financial disclosure period. As of this week, starting with Santander, the bank round begins – Itaú, Bradesco and Banco Pan.

See the complete list with the disclosure dates of the financial statements of the companies that make up the Ibovespa portfolio in 2023:

Sky opens the season

The first balance sheet for the 4th quarter of 2022, released by Cielo, brought satisfactory operating results in the view of market analysts. The company recorded recurring net income of BRL 1.5 billion last year, up 78.6% compared to 2021. In relation to the last quarter of 2022, the advance was 63.3% compared to the same period the previous year, with a profit of R$ 490.1 million.

“Cielo ends 2022 demonstrating its efficiency and operational capacity. In our interpretation, according to the consecutive positive results presented, the worst moment of competitive bleeding has definitely passed and the year 2023 should be of greater stability”, highlighted the Banco do Brasil analysts in a document to investors.

However, specialists pointed out that there was a lot of expectation regarding Cielo, which is reflected in the appreciation of its shares by 140% last year, and this can be felt in the short term.

Cielo closed on Friday (27), in the first trading session after the results were announced, with a drop of around 2.5%, even with positive records in the fourth quarter of 2022 and, consequently, last year as a whole.

“The result that Cielo presented was good, but it seems to me that the market came with a lot of expectations, and this could end up frustrating”, said Paulo Gala, chief economist at Banco Master.

The same is pointed out by Alexandre Espírito Santo, chief economist and partner at Órama Investimentos, who assessed that the prospect of even better numbers may have cost the company’s losses on the stock exchange on Friday (27).

American Factor

Americanas closes the balance sheet season for the main public companies in the country on March 29th. And, despite its shares being excluded from the Ibovespa and the other 13 B3 indices, investors continue to keep an eye on the company’s announcements and await the company’s 2022 results.

According to specialists, the “accounting inconsistencies” that led to Americanas’ BRL 43 billion debt will make investors more attentive – and suspicious – with the income statements. According to them, banks and retail companies should be the ones that will suffer the most from “mistrust”.

“Everyone will start looking at the numbers with a magnifying glass, after all, everyone was taken by surprise. After the door is broken down, people start looking for where the locks failed. Therefore, attention will increase significantly, and I believe that auditing companies will have to seek to improve their communications with the market”, evaluates Espírito Santo.

Paulo Gala adds that the recent events with the retailer can positively and negatively impact companies in the sector or that are involved with “withdrawal risk” operations.

On Monday (23), the Securities and Exchange Commission (CVM) questioned publicly traded companies about the way they have been dealing with “withdrawal risk” operations.

“At this point, it is worth noting that good companies end up being harmed by the distrust of the market, while others end up winning by occupying the space left by Americanas, as is the case of Magazine Luiza”.

Magazine Luiza had a market valuation increase of R$ 8.8 billion, counting from the day on which the material fact was released by Americanas pointing to a R$ 20 billion shortfall in its accounts until Wednesday (25), according to TradeMap survey.

Watching the Banks

Analysts believe that, on the one hand, financial institutions should register good gains in the last quarter of 2022 due to high interest rates, but, on the other hand, the prospects may not be the best due to the unfolding of the Americanas case.

“As a result of the last period of last year, banks will not have an impact with respect to Americanas. But, from the first quarter of 2023, things change and they must suffer”, said Paulo Gala.

Flávio Conde, equity analyst at Levante Ideias de Investimentos, says that he now has a doubt about the banks, whether or not they will grant provisions for bad debts after what happened to Americanas, one of the main companies in the country and with shareholders respected and well-known majorities.

“There will be a questioning with everyone from now on. They will want to understand how this happened, and, probably, the institutions should say that they questioned Americanas, but the answer they had was that the debt was increasing because the bank in question was being prioritized over the others”, he argued.

Commodities

It is expected that the commodities sector will bring positive results for the mining segment – ​​which registers an upward trajectory in iron ore prices, mainly with the reopening of China.

“Vale should post a good result, in line with the rest of the year, neither much better nor worse. As for agricultural commodities, the scenario is different, probably with a tight result due to lower demand from the US due to the slowdown in the economy”, adds Flávio Conde, from Levante..

But Conde points out that, even though the reopening of China began in November, the Asian country’s massive return to business now takes place in January, which should weigh more in the first quarter of 2023, and not in the last of 2022.

Retail

Retail, on the other hand, is in a different situation from commodities, facing the harsh reality imposed by high interest rates. “The clearest news at this first moment to pay attention to is the slowdown in the services sector, which should reflect in weaker results of some companies linked to the sector”, says Conde.

For Paulo Gala, chief economist at Banco Master, the decline in indicators such as the IBC-Br and retail sales corroborate the view that companies directly linked to these activities should report impacts.

“It is necessary to work with the cooling of the economy, with a GDP at ‘0 to 0’, and taking into account the more contractionary policy of the Central Bank to control inflation, keeping interest rates high”, highlighted Espírito Santo, from Órama.

Considered the “GDP preview”, the BC Economic Activity Index (IBC-Br) fell 0.55% in November 2022 compared to the previous month. Retail sales fell by 0.6% from October to November, according to the IBGE.

Other sectors

For the oil companies, the balance should have another positive bias, said Flávio Conde. In the analyst’s view, PetroRio, PetroReconcavo and 3R Petroleum will probably show good results due to the expansion of production. Petrobras should maintain numbers similar to those of the 3rd quarter of the year, according to Conde.

However, the analyst assesses that the environment is not so favorable for the steel sectors, with one of the weakest years for the price of steel in history, he recalls. A negative scenario is also faced by pulp and paper companies, which suffer from the reduction in demand from the United States.