Cyrela sees cash flow at risk amid record Brazil home cancelations

viernes 1 de julio de 2016 12:10 GYT

By Ana Mano

SAO PAULO, July 1 (Reuters) - Cyrela Brazil Realty SA could generate no free cash flow this year, as Brazil's largest listed homebuilder struggles with the impact of cancellations and the harshest real estate market in decades, a senior executive said on Monday.

São Paulo-based Cyrela has negative free cash flow from operations so far this year, Chief Financial Officer Eric Alencar said. Free cash flow is the money left for holders of bonds and shares after a company pays all operating and financial expenses.

Company estimates put the current rate of cancellations at around 25 percent of total sales, the highest since at least 1982.

The company, controlled by billionaire tycoon Elie Horn, generated about 900 million reais ($281 million) in cash last year, with almost half of it coming in the final quarter.

"The company may not generate cash in 2016," Alencar told Reuters in an interview this week, explaining that cancellations are affecting its ability to produce free cash flow.

The outlook for 2017 cash generation appears less challenging, he added, provided banks resume lending and confidence returns to consumers.

In the first quarter, Cyrela burned through 13 million reais of cash, according to regulatory filings. The company is scheduled to report second-quarter results on Aug. 9.

His remarks come as investors have grown concerned that Cyrela could make acquisitions a priority over protecting cash amid Brazil's harshest recession in eight decades.   Continuación...