(Adds CEO comments in paragraphs 2-6)
SAO PAULO, March 16 Estácio Participações SA
, Brazil's No. 2 for-profit education firm, on
Thursday beat fourth-quarter profit estimates on a drop in
sales, general and administrative expenses and revenue growth
driven by higher tuition fees.
In an interview after results were released, Chief Executive
Pedro Thompson said a revamped marketing strategy with more
regional ad campaigns helped to attract and keep students.
Estácio is focusing on student quality instead of just
boosting enrollment, he said.
"I want students who pay a certain fee, remain current on
tuition and do not drop out," he said. Estácio is upbeat about
student intake prospects after tripling the sales force and
revamping its advertising strategy, he said.
Estácio has also taken steps to reduce students' reliance on
Fies state loans to pay tuition. Last quarter, its Fies base
fell by 15 percent and the slide is expected to continue, the
company said in a statement.
"The Fies loans are no longer a growth driver in the
industry," said Thompson, who has overhauled fee collection
practices and offered refinancing for students in financial
In a Thursday securities filing, Estácio said net income
totaled 124.3 million reais ($40 million) last quarter, up 133
percent from the year-ago period and slightly above an average
consensus estimate of a 122.9 million reais compiled by Thomson
Expenses fell 44 percent to 151.2 million reais, well below
estimates, as Estácio removed provisions made in the third
quarter for potential credit losses related to Fies loans.
Average monthly tuition fees rose 9 percent while Estácio's
base of enrolled students climbed 2 percent to 508,000, even as
Brazil faces its harshest recession ever.
The numbers reflect Thompson's drive to boost student
loyalty as regulators analyze a takeover proposal from rival
Kroton Educacional SA, which would create the world's
No. 1 college operator.
Revenue rose 8.2 percent, higher than expectations, helping
cash flow from operations jump 23.9 percentage points on an
Earnings before interest, tax, depreciation and
amortization, a gauge of operational profit known as EBITDA,
more than doubled on an annual basis to 217.2 million reais,
well above consensus estimates of 133.5 million reais.
Debt servicing and other financial expenses topped income
from investments by 25.3 million reais last quarter, reflecting
an adjustment in the value of accounts receivables related to
the Fies program for 2015.
($1 = 3.1063 reais)
(Reporting by Guillermo Parra-Bernal and Ana Mano; Editing by W
Simon and Richard Chang)