SAO PAULO, Nov 7 (Reuters) - Brazilian homebuilder Gafisa SA posted a worse-than-expected third-quarter loss after profits at its middle-market division failed to make up for losses in its low-income unit.
Gafisa had a net loss of 9.96 million reais ($3.9 million), compared with a profit of 15.78 million reais a year earlier, according to a securities filing late Friday.
Analysts were split on their estimates for the quarter. Three expected the company to post a loss, with the average at 7.5 million reais. The other four, on average, saw the company earning 17.3 million reais.
The company’s middle-income division, also named Gafisa, earned 15.26 million reais in the quarter. The low-income Tenda division posted a 25.22 million real loss.
Gafisa announced late last year that it was studying a potential spinoff of Tenda, which would be concluded in 2015. The group acquired Tenda in 2008, but a series of costly budget overruns and canceled contracts in the unit have consistently weighed on Gafisa’s bottom line.
Gafisa said in its earnings release that Tenda’s weak performance in the quarter was mostly due to the completion and delivery of unprofitable projects from an earlier vintage and a high level of cancellations, which rose 9.6 percent from a year earlier.
Gafisa has been working to rein in expenses and boost margins in recent quarters after a rapid expansion into untried regions led to cost overruns and big quarterly losses.
Gross margins improved in the quarter to 36.4 percent from 34.4 percent a year earlier.
Last month the company said it had launched 510.4 million reais worth of new projects in the third quarter, up 142 percent from a year earlier. Total contracted sales reached 230.8 million reais, a 31.9 percent drop from the third quarter last year.
Adjusted earnings before interest, taxes, depreciation and amortization fell to 73.46 million reais, a 47.5 percent drop from a year earlier.
$1 = 2.56 Brazilian reais Reporting by Asher Levine; Editing by Leslie Adler