April 17, 2017 / 11:59 PM / in a year

Brazil's MRV Q1 home sales, starts rise while Cyrela slips

SAO PAULO, April 17 (Reuters) - Homebuilder MRV Engenharia SA on Monday reported a rise in first-quarter net sales and record housing starts, helped by slowing sales cancellations as management declared a turning point after years of economic crisis in Brazil.

By contrast, Cyrela Brazil Realty SA, which warned of high levels of sales cancellations in the quarter, reported slipping sales and flat housing starts.

The divergence, reported in separate securities filings, underscores how the performance of builders of affordable housing in Brazil hinges on the ability to contain a surge in canceled sales due to rising unemployment amid a lingering recession.

MRV’s Co-Chief Executive Rafael Menin said by booking only “guaranteed sales,” it had waited longer to register new signings, slowing the growth of gross sales to 7 percent from a year earlier, but slashing sales cancellations by 15 percent.

As a result, net sales climbed 15 percent from a year earlier to 1.322 billion reais ($427 million).

“The first quarter represented a turning point and we expect this year to be more active for launches and sales than 2016,” Menin told Reuters in a telephone interview.

The value of MRV’s new projects launched in the first quarter rose 25 percent from a year earlier to 1.211 billion reais, the highest ever for the quarter and largely concentrated in the month of March.

Menin said MRV aims to invest an additional 100 million to 120 million reais buying land in 2017 compared to last year.

“There is not much competition and we want to build a gigantic land bank before this window of opportunity closes,” he said, referring to MRV’s land holdings, which grew 0.7 percent in the three months through March to 41.4 billion reais.

MRV said spending on land, construction and urban amenities cut free cash generation by 58 percent from a year ago to 75 million reais. The transfer of some 8,000 units has also been held up by banks with restrictive credit policies, which should be overcome in the second half of the year, generating more cash and sales, according to the securities filing.

Cyrela did not provide information about its cash generation or land bank. It reported a 4.5 percent drop in net sales to 520 million reais, while the value of new construction edged 0.2 percent lower to 612 million reais.

$1 = 3.098 Brazilian reais Reporting by Gabriela Mello; writing and additional reporting by Brad Haynes; editing by G Crosse

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