May 25, 2019 / 2:59 PM / a year ago

Brazil's Cielo cut dividend payout so it could invest more - CEO

SAO PAULO, May 25 (Reuters) - Brazilian card processor Cielo SA's dividend cut, which it announced on Friday, is intended to give it room to raise capital expenditure in a competitive market, Chief Executive Officer Paulo Caffarelli said.

On Friday, Cielo said it would cut its dividend payout ratio to 30% from 70% of its net income and canceled its 2019 profit guidance, without providing fresh guidance. Last year, Cielo paid 106% of its net income.

In a phone interview with Reuters on Saturday, Caffarelli said the company may increase spending on technology, develop new services and products and even consider acquisitions.

"The payout change aims to raise our cash position to face a very competitive market," Caffarelli said. Cielo increased its market share in the first quarter for the first time since mid-2017.

Cielo's move underscores a fiercer competition in Brazil's card processing market, as upstarts such as PagSeguro Digital Ltd and StoneCo Ltd are biting into traditional players' market share. (Reporting by Carolina Mandl, Editing by Rosalba O'Brien)

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