Last November 11, Petrobras notified the market that they had achieved a record-breaking net profit of R$ 10.851 billion in the third quarter. The result was the result of a combination of factors, among them the high average price of oil, expansion of production (both of oil and natural gas) and depreciation of the real. In July, the oil approached US$ 150 a barrel, positively affecting the period's performance. Another Brazilian giant announcing billion-dollar profits was Vale. In comparison with 3Q 2007, the company's earnings jumped by about 150%, surpassing the mark of R$ 12 billion. There was, however, little room for celebration. At the same time as they disclosed highly positive numbers, they signaled a future of uncertainty and, possibly, much more modest profit.

To get an idea of companies' increased caution, one need only take a look at the performance comments that accompanied the period's results. Usiminas dedicated an item exclusively to outlooks. The directors said that they must inevitably to consider the new scenario triggered by the aggravation of the financial crisis and its influence, while acknowledging that it would be premature to assess the consequences to the Brazilian economy and the steel products market. Some effects are highlighted, such as lower availability of credit and its possible impact on the durable goods segment. “For 2009, we foresee a much slower pace of expansion of the internal demand for flat steels”, says Marco Antônio Castello Branco, Usiminas’s chief executive officer, in an excerpt from the document.

Another sector showing concern since the results from the period ended in September is civil construction. In general, analyst assessments for the sector are not good. Comprised mainly of newcomers, the sector was already facing difficulties in funding new enterprises. Most companies invested the resources raised from their IPOs basically on expanding their land banks, and they’ve already found that market conditions are no longer suitable for previously planned launches.

Gafisa CEO, Wilson Amaral, took the quarterly performance commentary as an opportunity to emphasize the company's good situation. “We have R$ 5 billion in construction financing lines approved by major Brazilian banks. Currently, we have engaged credits for R$ 1.6 billion in construction and another R$ 1.2 billion are undergoing processing, which leaves us approximately R$ 682 million available for new financings.” In another excerpt, Gafisa affirms that they have already felt customers’ increased caution in home purchasing decisions, especially in high income segments.

NO FORECAST — Warning signs for 2009 have been raised, but it's hard to find more objective forecast data. Camargo Correa Desenvolvimento Imobiliário (CCDI) attributed the higher conservativeness of launches to international volatility, but, as this edition went to print, they still had not made their launch guidance for next year known.

Producing forecasts at the end of this year has also become a complicated task for analysts. The deterioration since September has been so great (the trigger was Lehman Brothers' bankruptcy on September 15) that, though it's already December, the traditional forecasts for the Ibovespa for the end of this year and 2009 have still not appeared.

“The fourth quarter results should dictate the trend for 2009. But as there is little objective data, we adopted a more conservative stance to outline scenarios”, says Ricardo Tadeu Martins of broker Planner Corretora. Another professional who also admits difficulty is Fabio Cardoso, of Adinvest. “We'll need three to six months to know where the market is headed.” Pedro Galdi, investment analyst at SLW, follows the same line. According to him, the belief that the 2009 scenario would be less favorable was widespread among companies, but no-one dared speak of the long term.

And those who propose to speak of 2009 adopt a cautious posture. PDG Realty did not mention the financial crisis in their third quarter balance sheet, but they continue to provide guidance for 2009. Expected launches range from R$ 2 billion to R$ 3 billion. The interval, says Michel Wurman, financial and Investor Relations vice-president director, is due to uncertainty. “What we can't do is not talk about next year. Our judgment may even change, but it's absurd not to provide any judgment at all”, he says.

Among third quarter balance sheets, PDG was one of the companies whose results advanced the most. They recorded a net profit of R$ 64.1 million, 204% more than the same period in 2007, when earnings added up to R$ 21 million. Among companies that trade at least R$ 10 million per day on the Bovespa, this was the fifth highest profit advance in the market, second only to Eletrobrás (1,242%), JBS (934%), MRV (413%) and Ultrapar (345%). Although the announced numbers reflect a market that has already been modified, PDG guarantees that they are prepared for the crisis. “We have two strengths: available cash and activities in the low income segment”, Wurman says.

Klabin Segall is also untroubled by its cash situation, and says that in 2009 it will deliver anything from zero to R$ 1.6 billion in launches. “If we stopped today, there would be no need for capital for the next four years”, says Sérgio de Toledo Segall, the company's chairman. However, Klabin Segall will adopt a conservative stance, analyzing the launch of each project individually. If the moment is not appropriate, the company will await a more opportune time.

Details aside, the fact is that 2009 will start out full of uncertainty. Not much is expected for commodity-producing companies, even with the dollar's appreciation in relation to the real, due to the outlook for a worldwide economic slowdown. However, there's a generous dose of hope deposited in companies that give priority to the domestic market. The impact of the external crisis on the local demand scenario is the variable which is yet unknown.