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Brazil builder MRV posts lower profit, debt and cancellations drop
November 12, 2013 / 2:16 AM / 4 years ago

Brazil builder MRV posts lower profit, debt and cancellations drop

SAO PAULO, Nov 11 (Reuters) - 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 cancellations declined.

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 told Reuters.

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 months.

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 Reuters survey.

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