SAO PAULO May 14 Brazilian homebuilder MRV
Engenharia e Participacoes SA missed profit
expectations for the first quarter due in part to sales
cancellations, although it managed to continue generating free
cash flow while cutting debt.
Belo Horizonte, Brazil-based MRV said on Wednesday that
profit rose 2.7 percent to 81 million reais ($36.8 million) in
the quarter on an annual basis. Still, the result fell short of
estimates of a 114 million reais profit in a Reuters poll of
The company, which focuses mainly on the low-income market,
remained hampered by sales cancellations in the quarter, which
rose about 0.1 percentage points on an annual basis to 21.3
percent of total sales value. The figure was down from 24.1
percent on a quarterly basis, however.
"We don't envision a reduction in cancellations in coming
quarters," co-Chief Executive Officer Rafael Menin told Reuters
on Wednesday. Cancellations as a percentage of sales should
begin to decline once the company enacts a new system that
finalizes new sales only after the customer has secured
financing, he added.
MRV, like other Brazilian homebuilders, has struggled with
cancellations and cost overruns after a very aggressive
expansion in recent years. Analysts say the company is now one
of the healthiest in the sector after raising prices and
stepping up efforts to boost margins.
The company generated 56 million reais in free cash flow in
the first quarter, well below the 162 million reais it generated
in the previous three months. MRV said problems in the payment
transfer system from state-run mortgage lender Caixa Economica
Federal were to blame.
Still, net debt fell to the equivalent of 29.5 percent of
shareholder equity from 30.4 percent in the previous quarter.
MRV remains one of Brazil's least indebted homebuilders,
according to Thomson Reuters data.
Gross margins rose to 26.4 percent from 26.2 percent in the
previous quarter and 26.1 percent a year earlier. Return on
equity on a trailing 12-month basis declined to 10.5 percent
from 10.6 percent in the previous three months and 13.1 percent
a year earlier.
Earnings before interest, taxes, depreciation and
amortization, a gauge of operating profit known as EBITDA, rose
2.4 percent from a year earlier to 132 million reais, short of
the average analyst estimate of 178 million reais.
($1 = 2.20 Brazilian reais)
(Reporting by Asher Levine and Juliana Schincariol; Editing by