WRAP: Portugal's Sonae Bullish On
Brazil, Despite Turmoil
By SARAH J. RHYDDERCH
Dow Jones Newswires
OPORTO -- Despite the global market turmoil that has rattled companies
with exposure in Latin America, Portugal's Sonae retailing group said
Monday that it is holding the line, stressing its Brazilian investments are
planned for the long haul.
"We have no intention of reducing our investment in Brazil - on the
contrary, we are counting on rapidly expanding our presence there,"
Angelo Pauperio, administrator at Modelo Continente SGPS (E.MDL),
the supermarket unit of Sonae Investimentos SGPS (E.SIV), said
Monday.
"The volatility could have an impact on the level of consumption, but we're
in for the medium to long term," he added.
At a news conference Monday, the Sonae Group, which is also active in
specialized retail and real estate management, reported consolidated net
profit up 36% to 5.7 billion escudos (PTE) ($1=PTE174.63) in the first
half of 1998, compared with PTE4.2 billion a year earlier.
Modelo was the main generator of Sonae's consolidated sales, which rose
17% to PTE209.5 billion from PTE179.6 billion the previous year.
Modelo contributed PTE176 billion to the first-half sales.
While Brazil is an important market for Sonae, it still accounts for only a
small percentage of the company's total business, compared to Portugal,
where the economy is growing swiftly and private consumption is rising.
Sonae, through Modelo, plans to open three new hypermarkets in Brazil
through the end of the year, and four in Portugal.
The Brazilian optimism was also reflected in the plans of real estate
management unit Sonae Imobiliaria SA (E.SIB), which said it is also on the
lookout for opportunities there and in Spain.
Sonae Imobiliaria manages shopping centers and parking lots in Portugal,
and said it is looking for similar businesses abroad. Its shopping centers
usually feature one of Modelo's hypermarkets as the anchor store, as well
as Sonae's specialized retail outlets, leading to streamlined and integrated
management.
Sonae Group shares were mixed Monday while the broader market rose
off last week's lows.
At 1412 GMT, Sonae Investimentos was off PTE60, or 0.8%, to
PTE7,410 on volume of 67,650 shares, while Modelo Continente was
down PTE41, or 1.0%, to PTE4,174 with 17,783 shares traded.
Sonae Imobiliaria, meanwhile, jumped sharply, rising PTE106, or 4.0%, to
PTE2,756 on volume of 10,220 shares.
The benchmark Bolsa de Valores de Lisboa index of continually traded
national shares (BVL-30), meanwhile, was up 113.76 points, or 2.5%, at
4700.87 points at 1412 GMT.
Brokers said the weakness in Modelo and Sonae Investimentos came as
investors took profits after the earnings report, though they stressed all
three companies were seeing very little volume.
"Sonae and its subsidiaries are fairly closely held and investors don't like to
change their positions much," a broker in Lisbon said. "We're seeing a bit
of selling after the disclosure, but a floor's been drawn under it pretty
quickly," he added.
-By Sarah J. Rhydderch; 351-1-319-1863; srhydderch@ap.org
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