SAO PAULO Aug 14 Brazilian homebuilder MRV
Engenharia e Participacoes SA beat profit
expectations for the second quarter as demand for low-income
housing remained robust while the negative impact from older,
less profitable projects diminished.
Belo Horizonte, Brazil-based MRV said on Thursday that
adjusted net income rose 14.2 percent to 134 million reais
($59.2 million) in the quarter on an annual basis, beating
estimates of a 98.7-million-real profit in a Reuters poll of
MRV, like other Brazilian homebuilders, has struggled with
cancellations and cost overruns in recent years after a period
of aggressive and poorly managed expansion.
"This quarter was an inflection point," Co-Chief Executive
Officer Rafael Menin told Reuters on Thursday.
He explained that projects launched before 2012, which tend
to be less profitable due to poor cost controls, now make up a
smaller share of total deliveries, boosting margins.
MRV's gross margin rose to 27.8 percent in the quarter from
26.4 percent in the previous three months.
Menin said the company was well-prepared to deal with
headwinds caused by a slowdown in Brazil's economy because of
its focus on the low-income market, much of which is
government-subsidized, and low competition in the markets where
The company generated 138 million reais in free cash flow in
the second quarter, well above the 56 million reais it produced
in the previous three months. MRV has said problems in the
payment-transfer system from state-run mortgage lender Caixa
Economica Federal were to blame for low cash generation in the
Still, net debt rose to the equivalent of 30.8 percent of
shareholder equity from 29.5 percent in the previous three
Menin said the company was more focused on share buybacks
than dividend payments as a way to boost shareholder value.
Earnings before interest, taxes, depreciation and
amortization, a gauge of operating profit known as EBITDA, fell
1 million reais from a year earlier to an adjusted 161 million
reais, in line with analyst estimates.
($1 = 2.265 Brazilian reais)
(Reporting by Asher Levine and Juliana Schincariol; Editing by
Reese Ewing and Jan Paschal)