Brazil builder Gafisa pares back after rough 2011

Mon Apr 2, 2012 8:06am EDT

* Launches forecast lower for second straight year

* Reports $599 mln loss in 2011 before audit

By Brad Haynes

SAO PAULO, April 2 (Reuters) - Brazilian homebuilder Gafisa laid out more timid plans for 2012 after reporting a steep financial loss last year as the company struggled with delays, cancellations and cost overruns.

Gafisa booked a net loss of 1.093 billion reais ($599 million) in 2011, according to preliminary results released by the company late on Sunday. Gafisa said its audited results will be posted on April 9 with details of fourth-quarter operations.

The builder said it plans to launch new projects worth between 2.7 billion reais and 3.3 billion reais this year, projecting a second year of slowing growth after launching a portfolio worth 3.53 billion reais in 2011.

Gafisa said the estimates followed a decision to cut back in regions and income segments where projects were running over budget. The company reported a series of charges and provisions in its full-year results related to cost overruns, potential fines for late deliveries and sales canceled on credit concerns.

"The figures reflect the continuous deterioration of Gafisa's results as a great part of the necessary adjustments were left for the end of the year," said real estate analyst Guilherme Rocha of Credit Suisse Group.

An uncertain outlook and rising debt levels should make investors cautious on the stock, Rocha said. Gafisa's struggles highlight many Brazilian builders' scramble to shift away from ambitious growth plans after a sharp slowdown and surging construction costs hammered profit margins.

Chief Executive Alceu Duilio Calciolari recognized in a statement that changes in the company's strategy had hurt financial results.

"Despite the significant consequences, there's been no impact on present cash flow and we have enough liquidity to meet our obligations and execute our new strategic plan," he wrote.

Still, the weak results could stoke expectations of an impending takeover. In February, Gafisa turned down an offer from U.S. buyout tycoon Sam Zell's Equity International and local private equity firm GP Investimentos.

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