Brazil's largest property developer aims to More Than Double Deliveries in 2010

March 26, 2010, 5:07 AM EDT

By Laura Price and Robin Stringer

March 26 (Bloomberg) -- Cyrela Brazil Realty SA Empreendimentos & Participacoes, Brazil's largest property developer, forecast delivering more than double the units it managed in 2009 after fourth-quarter profit jumped fivefold as accelerating economic growth boosted demand for new homes.

The developer expects to deliver 17,000 to 21,000 units in 2010, up from 7,510 in 2009. Net income for the fourth-quarter climbed to 207.7 million reais ($114.08 million), or 49 centavos a share, up from 37.3 million reais, 10 centavos a year earlier, the Sao Paulo-based company said late yesterday in a regulatory filing. Net sales reached 1.2 billion reais.

Brazil's economy, Latin America's biggest, expanded 2 percent in the fourth quarter from the previous three months, the fastest pace in two years. Cyrela's contracted sales more than tripled to 2.3 billion reais in the period. Sales and orders topped the company's forecasts last year, Cyrela said Jan. 27.

"The volume of new projects was very strong in the quarter," Eduardo Silveira, an analyst at Fator Corretora in Sao Paulo, said in a phone interview before the results were announced. "Real estate demand continues strong, financing is abundant, so the question is execution, and Cyrela's execution is good."

Silveira has an "outperform" rating on Cyrela's shares.

Cyrela's margin on earnings before interest, taxes, depreciation and amortization rose to 22 percent in the quarter, compared with 10 percent in the same period last year, when the margin was reduced on the slowdown in the company's activities during the financial crisis, Cyrela said. The company increased the proportion of sales to low-income families, reducing its profit margins while maintaining "strong" sales, Silveira said.

Brazil's government may more than double its target for building low-income housing to as many as 2.5 million units by the end of 2014, Budget Minister Paulo Bernardo said on March 23. The original program offered subsidies to build 1 million houses by the end of 2010. The government is scheduled to announce the plan on March 29.