| SAO PAULO
SAO PAULO Feb 26 Brazilian homebuilder Gafisa
SA swung to a profit in the fourth quarter from a
year earlier, helped by the sale of a stake in its Alphaville
high-end residential unit.
Gafisa has also been working to rein in expenses, cut debt
and refocus on key markets since 2012 after a rapid expansion
into untried regions led to huge cost overruns, sales
cancellations and big quarterly losses.
Net profit for the fourth quarter came in at 921.3 million
reais ($392 million) according to a securities filing on
Wednesday, up from a 101.4 million reais loss in the same period
last year. Analysts estimates for net income had ranged widely
due to uncertainty over how the Alphaville stake sale would be
The deal to sell 70 percent of Alphaville closed in the
fourth quarter and resulted in a $1.5 billion cash inflow. The
company used part of those funds to cut debt to 36.1 percent of
shareholder equity from 126 percent at the end of September.
A new management structure and the diminishing impact of
older, less profitable projects helped lift adjusted gross
margins to 37.9 percent, up from 34.4 percent in the third
quarter and 21 percent a year earlier.
Adjusted earnings before interest, taxes, depreciation and
amortization, a gauge of operating income known as EBITDA, rose
to 978.9 million reais from 10.6 million reais a year earlier.
That beat an average analysts' estimate of 230 million
Excluding the Alphaville transaction, Gafisa generated 178
million reais of free cash flow in the quarter, up from 32.1
million reais in the prior quarter.
Last month the company said new project launches rose to 1.6
billion reais in the fourth quarter, an 8.7 percent increase
from a year earlier, while sales totaled 1.3 billion reais, 45
percent more than the fourth quarter of 2012.
Gafisa announced plans this month to spin off its
lower-income-segment Tenda unit, which if approved by
shareholders and the board, should be concluded in 2015. The
group acquired Tenda in 2008, but a series of costly budget
overruns and cancelled contracts in the unit have weighed on
Gafisa's bottom line.
($1 = 2.35 reais)
(Reporting by Asher Levine; Editing by Edwina Gibbs)