SAO PAULO Nov 12 Brazilian homebuilder MRV
Engenharia e Participações SA plans to increase the
pace of new project launches in the fourth quarter and beyond as
the company sells off existing inventory, Chief Executive
Officer Rubens Menin said on Tuesday.
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
has included cutting down on new project launches and selling
down inventory to increase cash flow and reduce debt.
The company posted a 13.2 percent decline in quarterly
profit from a year earlier late on Monday, although strong cash
generation helped reduce debt levels and cancellations declined.
While most of the third quarter's sales came from existing
stock, project launches "should begin to return to normal
levels" in the fourth quarter and beyond, Menin said on a
conference call with analysts to discuss earnings, adding that
profit margins should grow over the next three years.
Shares of MRV rose 0.56 percent to 8.96 reais in afternoon
trading in Sao Paulo.
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 (ROE) fell to 11.9 percent from 12.7
percent in the previous three months and 17.4 percent a year
"Even though there is still a significant way to go in order
to fully restore profitability, these set of results were in the
right direction, in our view," Credit Suisse Securities analysts
led by Nicole Hirakawa wrote in an investor note on Tuesday.
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.
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.
In coming quarters, the company should generate cash at
levels that exceed both net income and operational earnings,
Menin said on the call.