| SAO PAULO, March 14
SAO PAULO, March 14 Brazilian homebuilder MRV
Engenharia e Participacoes SA continued to generate
cash and cut debt in the fourth quarter, boosting the likelihood
of a larger-than-minimum dividend payment despite a sharp drop
in net income.
The company generated 162 million reais ($69 million) in
cash in the fourth quarter, four times more than a year earlier,
helping to lower net debt to the equivalent of 30.4 percent of
equity, it said late Thursday. MRV remains one of Brazil's least
indebted homebuilders, according to Thomson Reuters data.
MRV will decide at a shareholders' meeting in April whether
to pay a dividend in the amount of 35 percent of annual profit,
up from a company-mandated minimum of 25 percent. Net income
totaled 423 million reais for the year.
MRV also said Rubens Menin, who co-founded the company in
1979, will step down as chief executive officer in order to
comply with market governance rules. Menin will remain chairman,
with the transition likely to be formalized at an earlier
shareholders' meeting on March 26.
Belo Horizonte, Brazil-based MRV said profit fell 37.2
percent to 72 million reais in the quarter, on an annual basis.
The result fell far short of the average analyst estimate of 130
million reais, according to a Reuters poll of eight analysts.
The weak earnings were due in part to a spike in sales
cancellations, which reached 24.1 percent of total sales value,
up from 19.1 percent in the third quarter. But analysts expect
cancellations to decline this year as sales will only be
finalized after the customer gets financing.
"Revenue in the fourth quarter was a little lower, the
amount of cancellations were a bit higher than they had been,
which ended up affecting the results," Chief Financial Officer
Leonardo Correa told Reuters on Thursday.
Correa said the company expects to continue the progress in
2013 in generating cash and boosting sales. Sales rose 27
percent in the year to 5.09 billion reais.
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 one of
the healthiest in the sector after raising prices and stepping
up efforts to boost margins.
PROJECT LAUNCHES DOUBLE
While the company has not made an official announcement,
Menin's son Rafael Menin and nephew Eduardo Fisher are the most
likely candidates to take over as co-CEOs, Correa said.
Earlier this year MRV said new project launches more than
doubled in the fourth quarter on an annual basis, following a
push to sell off inventory. Most of the quarter's 1.23 billion
reais in sales continued to come from existing stock, MRV said.
Sales expenses rose 9 percent from a year earlier, while
general and administrative expenses climbed 4 percent.
Gross margins fell to 26.2 percent from 26.6 percent in the
previous quarter and 28.3 percent a year earlier. Return on
equity declined to 10.6 percent from 11.9 percent in the
previous three months and 14.5 percent a year earlier.
Earnings before interest, taxes, depreciation and
amortization, or cash flow, fell 18.9 percent from a year
earlier to 133 million reais, short of the average analyst
estimate of 192 million reais.