Brazilian builder MRV boosts cash, cuts debt; profit misses estimate
By Asher Levine
SAO PAULO, March 14 (Reuters) - 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. Continuación...