Mexico's Geo sees '09 revenue growth up
MEXICO CITY (Reuters) - Mexican home builder Geo forecasts higher revenue growth next year as it focuses on its core market for low-tier housing and cranks up projects to slowly build entire cities, Chairman Luis Orvananos said.
In the first quarter of this year, Geo (GEOB.MX) saw revenue growth on track for its previously forecast rise of 12 to 14 percent and from 2009 its top line growth will accelerate, Orvananos told the Reuters Latin America Investment Summit.
"This year is one of transition and we are going to grow (revenue) 12 to 14 percent and next year we will return to expansion rates of 15, 18, and 20 percent," Orvananos said on Thursday.
Geo's revenue saw a blip in the third quarter of last year when rain across the country delayed construction. Revenue for the quarter grew 10 percent, but far shy of the company's prediction of as high as 20 percent.
Revenue recovered to 14 percent growth in the fourth quarter and analysts believe Geo is now being more conservative
on its outlooks to avoid missing forecasts and see its share price dive.
Orvananos said Geo had decided to go back to basics and focus on building cheap homes for first-time buyers. Many of Geo's mass produced homes sell for less than $40,000.
"This was our niche and we are returning to the basics, because there are mortgages and there is a market," he said. "We are going to focus on this side. That is what we are currently doing and will do in the future."
Orvananos also said Geo planned to gradually sink more effort into building huge projects -- slowly creating cities close to other major urban areas by working alongside authorities to provide schools, roads, and soccer fields.
The plan, which in the end will create new cities with 500,000 inhabitants, also envisages working with industries to build industrial corridors to provide jobs and with retailers to build supermarkets.
(For summit blog: summitnotebook.reuters.com/)
(Additional reporting by Noel Randewich; Editing by Tim Dobbyn)
