MRV recovers margins after changes in Casa Verde e Amarela

MRV is accelerating price increases for affordable properties after adjustments to the Casa Verde e Amarela program, anticipating a return to historic profit margins.

In its second-quarter earnings report, released on Wednesday night, the company said it had accelerated project launches at the end of June, a trend that should gain traction in the coming months.

“Our projections point to a price increase and productivity gain above the estimated inflation for the next period, causing the gross margin of new sales to return to a level above 30% in the first half of 2023”, said MRV in the document. .

In July, the federal government announced changes to the program, expanding subsidies, lengthening financing terms and allowing the use of the FGTS to pay borrowers’ installments, responding to requests from construction companies, who complained about increases in input prices that compressed their margins.

“The changes to the program will help fill a gap in household income caused by inflation and higher interest rates,” Ricardo Paixão, director of finance and investor relations at MRV, told Reuters.

From April to June, MRV’s adjusted profit rose 6% over a year earlier, to R$215 million, mainly supported by higher revenues from the company’s unit in the United States, Resia.

In net terms, however, the company’s profit fell 71.4% year on year, to R$ 58 million, reflecting a sharp deterioration in the financial result in the wake of losses with swaps with shares and debt securities of the company.

MRV’s operating result in the quarter, measured by earnings before taxes, interest, amortization and depreciation (Ebitda), grew 48.9% to R$441 million.

Gross margin dropped 6 percentage points to 19.4%, still reflecting cost pressure, with MRV increasing input inventories. However, the company had a positive cash flow of R$ 343 million, after a deficit of R$ 817 million in the immediately previous quarter.