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UPDATE 2-Brazil's GPA posts steeper Q1 net loss as taxes, impairment weigh

Reuters
·2-min read

(Adds context in paragraphs 7-8, details in paragraph 9 and CFO quotes in paragraphs 11-12)

SAO PAULO, May 7 (Reuters) - Brazilian food retailer GPA said on Tuesday its first-quarter net loss for continuing operations widened by nearly 28% from a year-ago period, weighed down by tax effects and an impairment related to a real estate sale.

The company reported a net loss for continuing operations of 407 million reais ($80.2 million) in the quarter.

GPA said the losses deepened on expenses related to a tax renegotiation program it had joined, an impairment from the sale of its headquarters and lower tax gains.

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Excluding those effects, GPA's net loss for the quarter would have been 197 million reais.

On the operational front, its gross revenue grew 8.2% to 4.87 billion reais.

Core earnings, or adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 41% to 372 million reais, with the EBITDA margin increasing from 6.3% to 8.1% year-on-year.

GPA has been selling assets during the last quarter to cut debt, while also restructuring its business, turning its focus to higher-income clients.

It also raised $142 mln with a share offer in March.

Net debt including credit card receivables ended the quarter at 1.6 billion reais, falling from 3 billion a year earlier, while financial leverage dropped to 3 times from 9.8 times.

CFO Rafael Russowsky told Reuters better debt figures also came in, apart from asset sales and better capital structure, after a "very significant" operational improvement.

"These figures ... bring us closer and closer to really ending this 'turnaround' phase in the company to live a new moment, looking at growth", Russowsky said.

He did not give a target for financial leverage in the year-end, but said for a business such as GPA, he sees something close to 1 times to 1.5 times as "reasonable".

($1 = 5.0744 reais) (Reporting by Paula Arend Laier; Writing by Andre Romani and Steven Grattan; Editing by Kylie Madry and Sherry Jacob-Phillips)