Brazilian Companies Include Risk With Argentina Crisis In Financial Results

Devalued currency and soaring inflation put pressure on production costs and reduce sales

São Paulo

The crisis in Argentina and the sharp devaluation of the local currency are putting pressure on businesses that trade with the South American country - Brazilian companies in special.

A J.P. Morgan report analyzing quarterly reports from publicly traded companies show Brazilian businesses as the ones most affected by the Argentinian financial crisis. The list includes names such as Inbev, Klabin and Braskem.

Of all Brazilian businesses mentioned in the report, Alpargatas is suffering the most. According to J.P. Morgan, Alpargatas, owner of flip-flops brand Havaianas, has 19.1% of its revenue exposed to the Argentinian economy. In its Q2 report, the company acknowledged financial trouble brought by the Argentinian woes.

Man shows a 500 Argentinian pesos bill
Man shows a 500 Argentinian pesos bill - Xinhua

Alpargatas’ strongest product in Argentina is sporting goods. Sales were good until April, but the sharp devaluation of the local peso during the second quarter - which fell 30% against the US dollar - raised prices and caused a decrease in sales. 

Alpargatas said it took measures to lessen the blow, such as reviews of both production workflows and importing ready-made products.

Brazil exported US$ 11.5 billion between January and August of this year. This represents an increase of 1.1% in comparison with the same period in 2017.

Alpargatas is not alone. Other Brazilian enterprises are already expressing concern with Argentina.

Ambev, the Brazilian subsidiary of beverage behemoth Inbev, reported that costs (excluding depreciation and amortization, by hectoliter) rose 3.8% year over year, caused by Inflationary pressures in the neighboring country and rising costs of raw materials. Ambev declined to comment.

Translated by NATASHA MADOV


Read the article in the original language



​​