March 8, 2017 / 2:02 PM / a year ago

RPT-CORRECTED-UPDATE 1-Brazil's MRV net income misses consensus on fewer housing starts

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By Ana Mano

SAO PAULO, March 7 (Reuters) - Brazil’s largest low-income homebuilder, MRV Engenharia e Participações SA, posted a 1.2 percent rise in fourth-quarter net profit to 142 million reais ($46 million), missing analysts’ expectations as it launched fewer units than planned.

MRV had 7,975 housing starts in the final quarter of the year, a 29.5 percent drop from a year earlier, the company said in an earnings statement on Tuesday. In financial terms, launches fell by 27.3 percent to 1.2 billion reais.

“We had expected to announce record launches in the fourth quarter, but delays in building permit issuance prevented us,” Rafael Menin, co-chief executive officer, said in an interview to discuss results.

The Thomson Reuters consensus estimate for MRV’s fourth-quarter net income was 157 million reais.

Still, productivity gains pushed gross margins to the highest level since 2010, even as Brazil’s harsh recession prevented MRV from raising home prices, Menin said.

“MRV is prepared to build and deliver almost 50,000 home units per year,” Menin said, adding that external factors such as availability of credit and speed of permitting could affect results.

MRV reported a 6.2 percent drop in gross sales, but a lower rate of sales cancellations eased the impact on net revenue, which slipped 1.6 percent to 1 billion reais.

By booking a sale only after lenders approve mortgage terms for potential buyers, MRV reduced its rate of cancellations by 25 percent last year.

Earnings before interest, tax, depreciation and amortization, a gauge of operating profitability, fell by 7.7 percent to 160 million reais, missing a 168 million reais consensus estimate.

MRV operates in 145 Brazilian cities and plans to boost its land bank in 30 of them, Menin said, declining to name them.

With planned land bank investments of 800 million reais through the end of 2018, MRV forecasts product launches will increase from 29,500 units in 2016, Menin added.

At the end of last year, the company had building permits to build 50,000 units nationwide.

$1 = 3.12 reais Reporting by Ana Mano; Editing by Sandra Maler and Leslie Adler

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