Ipiranga sales jump after raids targeting organized crime in Brazil fuel sector

The chief executive of Brazilian fuel distributor Ipiranga said that the company has seen its sales volume increase after police and tax authorities conducted raids in order to dismantle a criminal ring operating in the sector.

Experts had predicted that the crackdown would result in major fuel distributors gaining profits.

Leonardo Linden, the CEO of Ipiranga, said that the raids had increased the company's sales, but it was still too early to determine the impact the raids would have on its margins.

He said, "I anticipate gains in (market shares) in August, and particularly in September."

Last month, the authorities of Latin America's biggest economy conducted a series raids to dismantle multi-billion dollar money laundering and fraud schemes connected to organized crime.

According to Ipiranga (controlled by Ultra), the firms targeted in the raids held a market share of 7% of the country's distribution of fuel, and 33% of Sao Paulo ethanol.

The raids are expected to increase sales for the major fuel distributors in Brazil, including Ipiranga.

"I have never seen a police operation of this magnitude. ... Linden added, "But it can't end here." We need to create a more balanced climate that encourages the companies who do things correctly in this sector. (Reporting and writing by Alberto Alerigi Jr, Isabel Teles, and Fabio Téixeira; editing by Gabriel Araujo and Leslie Adler).

(source: Reuters)