SAO PAULO Nov 11 MRV Engenharia e Participacoes
SA, one of Brazil's biggest homebuilders, posted a
13.2 percent decline in quarterly profit from a year earlier,
although strong cash generation helped reduce debt levels and
MRV, which focuses on low-income housing, said third-quarter
net profit fell to 131 million reais ($56.2 million), in line
with an average estimate of 133 million reais from seven
analysts polled by Reuters.
"Results still suffered from the impact of units sold in
2011 at lower prices and the cost pressures from that period are
still having an impact," Chief Financial Officer Leonardo Correa
He added that prices have been recovering since 2012 and
should contribute to better results ahead.
MRV, like many of its Brazilian rivals, has revamped
management processes and cut costs over the past two years
following an overly aggressive expansion. Part of its strategy
includes cutting down on new project launches and selling down
inventory in order to increase cash flow and reduce debt.
Most of the quarter's sales came from existing stock, MRV
said in a filing.
MRV's gross margins remained stable from the previous
quarter at 26.6 percent, but declined from 28.7 percent a year
earlier. Return on equity fell to 11.9 percent from 12.7 percent
in the previous three months and 17.4 percent a year earlier.
The company generated 208 million reais in cash in the third
quarter, helping lower its net debt-to-shareholder-equity ratio
to 33.8 percent from 39.3 percent in the previous quarter. As a
result, MRV remains one of Brazil's least-indebted homebuilders.
The company is considering more dividend payments or further
debt reduction among possible uses for the cash, Correa said.
While gross sales rose just 0.5 percent in the third quarter
from the second, the ratio of cancellations to gross sales
dropped to 19.1 percent, from 21.3 percent in the previous three
General and administrative expenses were little changed from
the previous quarter, however, and 25 percent higher than in the
third quarter last year.
Earnings before interest, taxes, depreciation and
amortization, a gauge of operating profit known as EBITDA, fell
14.8 percent from a year earlier to 196 million reais, just
short of the average estimate of 199 million reais in the