Brazil’s Stone Jumps as Damage Control Offsets Profit Miss

(Bloomberg) — StoneCo Ltd., the Brazilian payment-technology firm backed by Warren Buffett’s Berkshire Hathaway Inc., named new senior managers and issued guidance for the current quarter as it works to offset another earnings miss. The shares jumped after the announcements.

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Fourth-quarter adjusted net income was 34 million reais ($6.8 million), the Sao Paulo-based company said Thursday in a filing. That fell short of the average analyst estimate of 65.2 million reais, the fourth consecutive period that Stone posted a miss.

Among new executives is head of treasury, Diego Salgado, a former JPMorgan Chase & Co. director for Latin America debt capital markets. Stone also said it expects adjusted income before taxes for the first quarter to top 140 million reais. Chief Executive Officer Thiago Piau, 32, is working to lure back investors after a botched foray into lending and the worsening outlook for Brazil’s economy.

“We were always very aggressive when it comes to growth, but we tried doing too many things at once and lost our management capacity,” Piau said in an interview. “We’re in a new phase in 2022, with new people and a new structure.”

The stock surged as much as 30% in extended New York trading after the announcements to $12.45. It closed at $9.61 in regular trading. Stone, which provides payments technology for millions of businesses in Brazil, was down 90% from its peak last year as of the market close, having shed about $26 billion in market value during the period.

Piau, who has held the top job at Stone since before it went public in 2018, will continue as CEO. Co-founders Andre Street and Eduardo Pontes will remain on the board, and Piau said there are no plans to sell the company or take it private.

“We believe we can gain market share this year and continue growing while improving margins,” he said.

The firm also restructured its credit operation and expects to test the new product by the third quarter, according to Piau.