On past Tuesday, the web portal of Exame magazine published an article on the main MRV results in the last quarter of 2015. The magazine emphasized MRV’s strategy to increase its exposure in cities with larger populations in 2016.
The builder and developer MRV is going to change its launching mix and increase its exposure in more populous cities in 2016, informed MRV’s co-CEO Rafael Menin.
The company from Minas Gerais reported on Monday evening that its profit for the fourth quarter totaled R$140 million, a 36 percent year-on-year growth.
The average estimated by analysts pointed to a R$124.6 million profit. Profit for the year, however, dropped 24 percent, to R$548 million.
Menin reiterated that he expects 2016 to be a year with property sales and launchings at levels similar to or a little lower than in 2015, despite the challenges imposed by Brazil’s economy.
He said, however, that MRV will increase the distribution of dividends from 25 to 30 percent of the profit for the year.
"We maintain a very conservative stance in terms of cash," says the executive, adding that for 2017, "if Brazil’s economy improves, we will promote a correct allocation to shareholders, by buying back of shares or increasing dividends."
According to the executive, the company’s strategy for 2016 estimates increasing the exposure of launchings in more populous cities, naming marketplaces such as São Paulo, Fortaleza, Curitiba, and Campinas.
Until now, the launching mix was 70 percent in smaller cities and 30 percent in largest cities.
This year this figure will change, according to Menin, but it will not reach a 50-50 ratio.
MRV seized the possibility for bargaining land prices and acquired land plots in large cities in 2014 and 2015, said the executive.
"Because we operate in 134 cities, we have the flexibility of a very large operation, which allows us to reassign our inventory in a more assertive way," says Menin.
Last year, land prices dropped 16 percent compared to the prior year, driven by a steep drop in competition in this segment.
In aggregate, the company spent 280 million buying land in 2015.
"We could have been more aggressive in larger cities. As competition in these cities decreases, we will promote more launchings there," says Menin, adding that the mark-up per unit is similar to the margin earned in other Brazilian regions.
In the last three months of the year, 48 percent of the land was bought under barter agreements or payments in installments, contingent to the approval of the projects, added the company.
Despite the 13.3 percent increase in the year, contract terminations dropped 10.6 percent in the fourth quarter compared to the same quarter in 2014, says MRV.
In 2015, the company completed the implementation of the "concurrent sales" process, which conditions a sale to credit approval, and tends to minimize the so-called contract terminations.
Sales in the fourth quarter dropped 7 percent compared to the prior year, but increased 5 percent compared to July to September, to R$1.38 billion.
As for launchings, they increased 35.1 percent year-on-year and 56 percent compared to the third quarter of 2015, to R$1.63 billion.
The fourth quarter, MRV’s total net operating revenue grew 7.2 percent compared to the same period in 2014 to R$1.208 billion.
EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) was R$174 million, or 22 percent higher than EBITDA for the prior year.
On average, analysts forecasted EBITDA of R$158 million. MRV closed 2015, generating cash of R$806 million in 2015, a 42 percent increase over 2014, closing the year at R$1.7 billion in cash, 25.7 percent above cash recognized at the end of the prior year.