* Q1 net loss of 55 million reais worse than expected
* Adjusted EBITDA of 67.9 million reais misses forecasts
* Cancellations drag on Tenda, Gafisa units
By Asher Levine
SAO PAULO, May 11 Brazilian homebuilder Gafisa
SA posted a worse-than-expected first-quarter net
loss as sales cancellations at its low-cost Tenda unit and
mid-range Gafisa division dragged on profitability.
Gafisa booked a first quarter net loss of 55 million reais
($27.2 million), compared with a 31.5 million reais loss a year
ago, according to a securities filing released late on Friday.
Four of the six analysts polled by Reuters had predicted an
average net loss of 27 million reais, while the remaining two
had expected a profit of 59 million reais.
Gafisa embarked on a turnaround strategy in October 2011
after a rapid expansion into unfamiliar markets led to huge cost
overruns, sales cancellations, and big quarterly losses.
That effort included reorganizing management, focusing new
launches on key markets, and halting launches in its low-income
Tenda brand, which suffered from canceled contracts as the
credit profile of its clients deteriorated.
Adjusted earnings before interest, taxes, depreciation and
amortization, a gauge of operating profit known as EBITDA, fell
32 percent from a year earlier to 67.9 million reais, missing
the average estimate of 101.2 million reais in a Reuters survey.
Canceled Tenda sales continued to weigh on Gafisa's overall
profitability in the first quarter. The Tenda unit posted a 25.5
million reais adjusted operational loss, more than double the
loss registered a year ago.
Adjusted EBITDA at the company's high-end Alphaville unit
grew 17 percent to 48.4 million reais from a year earlier.
The middle-to-high-income Gafisa brand posted adjusted
operational income of 45 million reais, down 36 percent from a
year earlier. The unit was affected by a greater number of sales
cancellations due to a stronger pace of unit deliveries in the
second half of 2012, the filing said.
Total debt at the company dropped to 94 percent of
shareholder equity at the end of March from 114 percent a year
earlier. Gafisa executives said in a securities filing last
month that they plan to keep debt levels stable in 2013.
Gafisa's cash burn, a measure of the speed at which cash is
spent on new projects, was a negative 89 million reais in the
quarter on a cash flow generation of 122 million reais, the
Gafisa stock spiked in mid-April after local media reported
that the company received four offers for its profitable
Alphaville unit in a deal that could fetch about 2 billion reais
and help pay down debt. Gafisa owns 80 percent of Alphaville and
is in arbitration to buy the rest.
In its earnings release on Friday, Gafisa said it would
continue to analyze Alphaville's strategic options and would
inform the market as soon as a decision is made.
Potential bidders for Alphaville include Sam Zell's Equity
International, a consortium formed by private-equity firms
Patria Investimentos and the Blackstone Group and real
estate investment company VBI Real Estate, Valor Econômico
newspaper reported last month.