Monday, April 21, 2014

Venezuela: A "Must-Read" Link to Rising Devaluation in a Troubled Foreign Economy

COMMENT: "Since Brink's has been able to obtain US dollars at the SICAD II rate (approximately 50), and is not eligible to apply for exchange at the official rate (6.3), and does not expect to be able to access the SICAD rate (11), it is adopting the SICAD II rate for reporting Venezuela results," the company said. 

Applying the SICAD II rate, Brink's says 2013 revenue of $447 million from Venezuela would have been reduced to about $56 million.  

The Brink's Company (BCO) announced today (April 21) that it will no longer use Venezuela's official exchange rate of 6.3 bolivars per US dollar and has adopted the government's SICAD II floating rate of approximately 50 bolivars per US dollar, which took effect on March 24.  

Consequently, Brink's expects to incur a first-quarter remeasurement charge related to the write down of substantially all of its bolivar-denominated net monetary assets. At December 31, 2013, bolivar-denominated net monetary assets totaled $120 million.

Tom Schievelbein, chairman, president and chief executive officer, said: "Brink's has been operating in Venezuela for more than 40 years, through numerous economic cycles. We remain committed to this business, which is extremely well-managed by our local team and has demonstrated strong operational and financial performance."
 
http://laht.com/article.asp?ArticleId=1943359&CategoryId=10717