UPDATE 2-Brazil Cyrela net jumps 67 percent, beats views

* Q2 profit rises more than expected to 157.1 mln reais

* Low-income home sales return to pre-crisis levels

* Operating expenses plunge 40.6 pct, helping bottom line (Adds comments, guidance on low-income segment, shares)

By Elzio Barreto and Guillermo Parra-Bernal

SAO PAULO, Aug 14 (Reuters) - Cyrela (CYRE3.SA), Brazil's largest real estate developer, reported a higher-than-expected second-quarter profit on Friday as it sold more apartments and slashed spending on advertising and personnel.

Net income jumped to 157.1 million reais ($86 million) from 94.1 million reais a year earlier, Cyrela said in a securities filing.

The company was expected to post profit of 118.7 million reais, according to the average estimate of four analysts in a Reuters survey.

Homebuilders that were among the hardest hit by the global credit crisis that pushed Brazil into recession late last year are gradually recovering thanks to a government program to boost access to housing.

Sales at Cyrela's Living unit that caters to low-income homebuyers are growing in August at a faster pace than in months just before the intensification of the credit crisis late last year, said Chief Executive and Chairman Elie Horn, also Cyrela's controlling shareholder.

"This is a segment that will thrive and the government is doing what it takes to make that happen," Horn said in a conference call with analysts and investors.

The $18 billion "Minha Casa, Minha Vida" program launched in March by President Luiz Inacio Lula da Silva has also spurred sales for Cyrela's rivals Gafisa (GFSA3.SA) and Rossi Residencial (RSID3.SA).

The industry tumbled in the wake of the global credit crisis last September, when wary consumers recoiled from purchasing homes as credit dried up and joblessness spiked. But Horn hinted activity will heat up in coming months.

"The world won't collapse," he said. "We are back to normal mode, people sleep, people eat, people buy."

Living will account for up to 35 percent of sales this year and up to 50 percent next, Cyrela executives said in the call.

Still, the company has reduced its number of new developments to preserve cash and focused sales on existing projects to reduce its stock of apartments and homes.

The Sao Paulo-based developer launched 644.3 million reais worth of new projects, about one-fourth of the 2.56 billion reais in second quarter 2008.

Net revenue rose to 875.6 million reais from 794.9 million reais, with about 50 percent of sales coming from previously launched residential and office buildings.

Cyrela said real estate demand should pick up in coming quarters because of President Luiz Inacio Lula da Silva's $18 billion plan to spur construction of about 1 million new low-income homes.

"Cyrela is working at full steam to benefit from opportunities resulting from this initiative," the company said in the filing.

Operating expenses fell 40.6 percent to 96.2 million reais, led by a decline in selling costs and administrative spending.

Earnings before interest, taxes, depreciation and amortization, a measure of operational profitability and cash generation known as EBITDA, rose to 209.4 million reais from 152.9 million reais.

The company presented 2008 results on a pro forma basis because of changes in accounting rules in Brazil to meet international regulations.

Cyrela fell 2.8 percent in late morning trading to 20.2 reais. ($1=1.832 reais)