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State-owned companies gain efficiency and record higher profit since recession

Governance

Positive results came in the face of cutting spending and a favorable economic environment for investments

Changing governance of state-owned enterprises, more efficient management and transparency measures have changed the reality of Brazilian companies for the better. Data from the Ministry of Planning, Development and Management show that the profit of these companies increased from R $ 8.7 billion in the third quarter of 2016 to R $ 23.2 billion this year - a 167% increase.

Among the highlights, the highest growth was recorded by Banco do Brasil. In the period, the institution grew 11%, when registering a net profit of R $ 7.9 billion. Petrobras was able to reverse a loss of R $ 15.8 billion in the first nine months of last year, to a profit of R $ 5.7 billion this year.

In the face of the changes implemented by the Government of Brazil, investor confidence increased and resources were again applied in the financial market and state-owned enterprises. In terms of market value, state-owned companies have appreciated again in the last 12 months.

In the period, for example, the market value of Petrobras jumped 7.8%, from R $ 188.6 billion to the current R $ 203.3 billion. The Bank of Brazil recorded an impressive result: its market value rose R $ 34.6 billion from last year, currently marking R $ 100 billion.

Efficiency and management

The resumption of the growth of these companies was caused by the positive environment of the Brazilian economy and the reduction of personnel expenses. The responsibility in the management of the state-owned companies was also decisive for the results.

In the latter case, the change came through the State Responsibility Law. Also sanctioned in 2016, this legislation foresees tougher and more transparent rules for the appointment of strategic positions of state-owned companies. It prohibits political nominations for high-profile technical posts, which enables a more pragmatic and efficient management of companies.

Already in reducing costs, the efforts paid off. From January to September, 26.3 thousand vacancies in state-owned enterprises were eliminated in relation to the same period of last year, and 43 thousand employees in the comparison with 2015. At the same time, the number of state-owned companies decreases in Brazil, falling from one total of 154 last year to 149 in 2017.

"Stirring frames is part of the effort we are making to recover and increase the sustainability of companies, reduce costs and bring them closer to market values," said the ecretário de Coordination and Governance of State Companies, Fernando Ribeiro Soares , in an interview with journalists.

The main cuts were in the Caixa Econômica Federal (- 7,2 thousand employees), Correios (-7.1 thousand employees), Petrobras (-4, 01 thousand employees) and Banco do Brasil (-2.6 thousand employees). These numbers include positions of trust and voluntary termination programs.

" State-owned companies are going through a continuous revaluation, always with the vision of generating more results for society," said the secretary, who estimates that there will be 500,000 fewer jobs in state-owned enterprises, which increases corporate sustainability and efficiency. 

Source: Government of Brazil, with information from the Ministry of Planning