TIM (TIMS3) increases profit in 1Q24, but shares fall sharply today

A TIM (TIMS3) announced a normalized net profit of R$519 million in the first quarter of 2023 (1Q24). For analysts, the results were in line with the estimate – however, the net profit was lower than desired.

This Tuesday (07), the TIM shares fall 6.20%, quoted at R$ 17.40.

Citibank says the result of the TIM’s net profit was slightly influenced by a higher capex than expected and an increase in financial expenses. For the bank, leasing continues to weigh on financial expenses and showed another sequential increase to R$342 million, compared to R$325 million in the fourth quarter of 2023.

“As a result, the net profit of TIM in 1Q24of R$519 million (+19% compared to a year and -28% compared to the previous quarter), was slightly below our estimates, despite operational results in line”, they state.

The number is also lower than Safra’s estimate by around 8%. “The difference from our estimate was mainly due to higher financial results, which were impacted by non-cash items in the quarter,” says the bank.

TIM: Adjusted Ebitda is praised by banks

On the other hand, the reported adjusted Ebitda (Earnings before interest, taxes, depreciation and amortization), of R$2.9 billion, was praised by banks. The result was 0.7% above Safra’s expectations and 11% higher than the previous year, with a margin reaching 47.4%.

Analysts explain that positive operating performance and controlled operating expenses (+4.5% compared to the previous year) led to this increase.

Furthermore, Citi cites a 7% increase in mobile revenues compared to a year, with expansion in postpaid (+7%), while prepaid revenues remained stable.

“Network and interconnection expenses were the main factor reducing the margin (+17% compared to a year), but operational leverage and discipline in other lines compensated. As a result, Ebitda margin improved 140 basis points year-on-year to 47%,” says Citi.

“Although solid, the results were quite in line with estimates for Ebitda and a little weak in leasing and capex expenses, so we expect a neutral reaction from the market”, adds Citi, which has a buy recommendation for the companies. TIM shareswith a target price of R$22.

TIM increases profit by 19% in 1Q24

A TIM announced a normalized net profit of R$519 million in the first quarter of 2023 (1Q24), according to the new quarterly balance released on Monday (6).

The result of TIM in 1Q24 showed a growth of 19% compared to the same period in 2023, when normalized net profit had been R$437 million.

In its results presentation, TIM states that it recorded ‘solid operational performance on the main business fronts’. The operator has been increasing its revenue in the mobile and fixed telephone and internet segments, which contributes to cost dilution and improved margins.

With this result, TIM continues with the dynamic of “recovery of the bottom-line with double-digit growth that it has been showing in recent quarters”.

According to new TIM quarterly balance sheetnormalized earnings per share (EPS) reached R$0.21 in 1Q24, while in 1Q23 this value was R$0.18.

Normalized EBITDA was R$2.89 billion, with annual growth of 10.7%, mainly attributed to the operational performance of the company’s main business fronts.

The indicator in the ‘standardized’ criterion excludes a series of income and expenses that TIM considers non-recurring.

The margin TIM’s EBITDA it increased by 1.4 percentage points (pp) in the first quarter of 2024, reaching 47.4%. With this, the company recovers its “high level after a period impacted by the acquisition of Oi Móvel’s assets”.