SAO PAULO (Reuters) - MRV Engenharia e Participações SA will keep investing in land to take advantage of Brazil’s growing housing deficit, said Co-chief Executive Officer Rafael Menin on Wednesday after the low-income homebuilder posted quarterly profit in line with estimates.
Belo Horizonte-based MRV (MRVE3.SA) intends to buy land in about 22 Brazilian cities where its landbanks are not big enough to meet demand, Menin said. Brazil’s largest low-income homebuilder will spend about 290 million reais ($90.1 million) buying land this year and will invest about the same in 2017, he said in an interview regarding third-quarter results.
“New families are formed at a faster pace than the market’s capacity to build and finance new homes,” Menin said, citing data provided by the government’s statistic bureau IBGE.
The focus will be on developing projects in capital cities, Menin added, as the company repositions itself after aggressive growth in the Brazilian interior.
MRV’s plans to keep buying land show the company is counting on the government keeping up subsidized mortgages for low-income buyers through the Minha Casa, Minha Vida program.
The company expects demand for new homes to remain strong as Brazil’s housing deficit grows by 777,000 units per year, according to government data cited by MRV in a Wednesday securities filing.
MRV said in a securities filing that net income rose 5 percent from a year earlier to 150 million reais ($46.4 million) in the third quarter. The company was expected to post a quarterly profit of 153.5 million reais, according to the average estimate compiled by Thomson Reuters.
Net sales rose to about 1 billion reais, a 19 percent increase from the same quarter last year, as the company was able to keep a lid on sales cancellations, which have been hurting homebuilders amid Brazil’s prolonged recession.
The rate of contract cancellations was stable from the prior quarter at 23 percent of gross sales and almost 10 percentage points lower than in the same period a year ago.
Still, gross launches fell 26.1 percent to 5,505 units last quarter as a bank sector strike in September affected the company’s ability to access credit lines to finance and launch new developments, Menin said.
After 15 consecutive quarters generating cash and given improvements in the economic outlook, MRV will push a more “aggressive” dividend policy in the coming months, Menin said. As result, MRV plans to distribute an extraordinary dividend of 150 million reais in the first quarter of 2017.
($1 = 3.2173 reais)
Reporting by Ana Mano; Editing by Brad Haynes and Lisa Shumaker