On May 11,
) reported its financial results for the first quarter of 2012,
with a net income of R$100.9 million (US$57.0 million), down 21.7%
from R$128.8 million (US$77.6 million) in the year-ago quarter
based on elevated expenses.
Earnings per share were recorded at R$0.6 per share (US$0.34 per
ADR) compared with R$0.8 per share (US$0.48 per ADR) reported in
the year-ago quarter.
In the first quarter, operating revenue was R$3,228.5 million
(US$1,824.0 million), up 6.1% year over year and down 9.8%
sequentially. The year-over-year improvement was primarily
attributable to an increase in revenues from international
passenger business alongside a rise in passenger demand across the
company's domestic route network.
Passenger revenues and the overall cargo revenues in the first
quarter reached R$2,602.1 million (US$1,470.1 million) and R$208.6
million (US$125.7 million), representing year-over-year growth of
9.7% and a decline of 18.2%, respectively.
Total operating expenses in the first quarter increased 10.9%
year over year to R$3,251.9 million (US$1,837.2 million). Huge
personnel expenses alongside cost of fuel, marketing, third party
services and aircraft leasing increased operating expenses.
EBITDA in the first quarter was R$171.8 million (US$97.1
million), down 38.7% year over year, with a margin of 5.3% compared
with 9.2% in the corresponding quarter of 2011.
Exiting the first quarter, financial liability was recorded at
R$2,021.8 million (US$1,110.9 million) versus R$1,998.0 million
(US$1,057.1million) in the previous quarter. Cash and cash
equivalents were recorded at R$553.6 million (US$304.2 million)
versus R$650.1 million (US$344 million) in the prior quarter.
During the quarter, net cash generated from operating activities
was R$259.9 million (US$146.8 million). However, net cash used in
operating activities was recorded at R$105.0 million (US$63.3
million) in the year-ago quarter. Purchases of property, plant and
equipment were recorded at R$47.8 million (US$27.0 million)
compared with R$21.9 million (US$13.2 million) in the year-ago
Earlier in 2011, LAN and TAM entered into binding agreements to
combine their holdings as a single entity known as LATAM Airlines
Group. Finally in May 2012, LAN and TAM successfully obtained
registrations and authorizations to commence offer in order to
exchange TAM shares initially for Holdco II shares and ultimately
for LAN shares in Brazil and in the United States.
TAM S.A., operating through its subsidiaries TAM Linhas Aéreas
and TAM Mercosur, is a renowned air transportation services
provider, both in the domestic and international markets. TAM
competes directly with its peers, such as
GOL Linhas A
The company revised its guidance for 2012 aiming to maintain
profitable business. Management expects demand growth in the range
of 7%-9%, scaling down from the original guidance of 8%-11%. Supply
growth target has been revised to (-1) % to 1% compared with 1% to
3% guided earlier. The load factor estimate, however, remains in
line with the previously guided range of 76% to 78%.
We currently maintain a long-term 'Neutral' recommendation on
the stock. Moreover, Tam S.A has a Zacks #3 Rank, which translates
into a short-term (1-3 months) 'Hold' rating.
AMR CORP (AAMRQ): Free Stock Analysis Report
GOL LINHAS-ADR (GOL): Free Stock Analysis
TAM SA-ADR (TAM): Free Stock Analysis Report
To read this article on Zacks.com click here.