* Homebuilder PDG posts worse-than-expected $37 mln Q1 loss
* Launching fewer units; focus on inventory, deliveries
* Shares outperform index as EBITDA turns positive
By Asher Levine
SAO PAULO, May 10 PDG Realty SA, one
of Brazil's biggest homebuilders, posted a worse-than-expected
first quarter loss on Friday, as the company cut back new
projects to focus on deliveries and unsold inventory.
PDG recorded a first-quarter net loss of 73.8 million reais
($36.9 million), down from a 32.5 million reais profit a year
ago, worse than all estimates in a Reuters poll of analysts.
Hit by runaway construction costs after an ambitious
expansion plan tripled the size of its operations in three
years, PDG Realty cut back operations sharply in 2012 and laid
out a three-year plan to return the company to profitability.
It re-evaluated the operational profit margins on its entire
backlog late last year, leading it to recognize a net loss of
1.787 billion reais in the fourth quarter. Much of that was due
to poorly controlled costs after the firm engaged third-party
firms to handle a boom in construction projects launched in
"While we have restarted operational activity, our financial
performance is still being very heavily impacted by the
adjustment in construction costs," Chief Executive Officer
Carlos Piani told analysts on a conference call on Friday. "We
expect to see a bigger positive impact of the restructuring
process in the second half of the year."
Earnings before interest, taxes, depreciation and
amortization, a gauge of operating profit known as EBITDA, fell
24 percent from a year earlier to 137.9 million reais, missing
the average estimate of 157.8 million reais in a Reuters survey,
though up from an operational loss of 1.357 billion reais loss
in the fourth quarter.
"Although most operating figures came in below expectations,
EBITDA in positive territory supports management's comments
about major adjustments having finished in 2012," Deutsche Bank
analysts led by Esteban Polidura wrote in a Friday note.
Shares of PDG Realty rose 0.91 percent to 2.22 reais in
early Friday trading, while the benchmark Bovespa index was down
Part of PDG's strategy include reining in new launches and
accelerating deliveries in an effort to generate cash and pay
down debt. Deliveries rose to 4,051 units in the first quarter
from 3,800 units in the same period the year before. Launches
fell to 1,765 units from 3,231 units in the year-ago period.
The company will continue to burn cash through most of the
year, however, reaching a positive cash flow by 2014, executives
said on the conference call.