November 11, 2010 / 10:13 PM / 9 years ago

UPDATE 1-Cyrela profit misses estimates on expenses, sales

* Net income sinks 33 percent, misses analysts’ estimates

* Revenue down, expenses up on mixed quarter for launches

* EBITDA tumbles 25 percent, below estimates (Adds explanation of profit decline, executive comment)

By Guillermo Parra-Bernal

SAO PAULO, Nov 11 (Reuters) - Net income at Cyrela (CYRE3.SA), Brazil’s biggest homebuilder, tumbled 33 percent in the third quarter, missing analysts’ estimates, as expenses rose and revenue from home sales fell more than expected.

The Sao Paulo-based company, controlled by the family of Chief Executive Officer and Chairman Elie Horn, reported on Thursday profit of 176 million reais ($102 million), compared with 264 million reais a year earlier. A Reuters survey of nine analysts forecast a quarterly profit of 198 million reais.

Cyrela expects to meet its goal of 4 billion reais to 5 billion reais in launches only by the end of the year. Launches, which fell in the quarter from last year, reached 3.1 billion reais in the year through September.

Sales of new projects missed the company’s expectations, because some large projects got tied up in the approvals and registrations process and were launched only in October, the company said in a securities filing.

A 36 percent jump in payroll expenses pushed expenses higher and hurt profit, the company said. Operating expenses rose 91 percent to 173.2 million reais from a year earlier.

Net revenue fell 14 percent to 1.16 billion reais as real estate development and resales dropped by 15 percent. Costs fell 15 percent, helping offset a decline in revenue, the company said.

Increased launches and efforts to shed inventory more quickly may keep pressure on earnings for the coming quarters, analysts said. But rising prices for home units in certain segments will help Cyrela partly offset the higher costs.

Earnings before interest, taxes, depreciation and amortization, a measure of cash generation and operational profitability known as EBITDA, fell 25 percent to 219.9 million reais in the quarter from a year earlier.

The jump in expenses dragged down EBITDA to 18.9 percent of sales from 21.7 percent the year before, the filing said.

Analysts in the Reuters poll expected EBITDA of 277 million reais.

$1=1.72 reais Reporting by Guillermo Parra-Bernal. Editing by Robert MacMillan

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