Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cyrela Brazil Realty SA Empreend e Part (CYRBY, Financial) reported a solid performance with a PSV of BRL2.5 billion launched in the quarter and BRL4.7 billion year-to-date.
- Sales increased by 24% year-on-year, reaching BRL2.5 billion in the quarter and BRL5.8 billion in 2024.
- The company's net revenue reached BRL2 billion, with a net income of BRL473 million and a net margin of 23.3%.
- The net debt-to-equity ratio was reduced to 7%, indicating strong cash generation and financial health.
- The company maintained a stable gross margin of 33.3%, reflecting controlled expenses and efficient operations.
Negative Points
- The Brazilian Central Bank's interest rate hikes and deteriorating inflation outlook pose challenges to the sector.
- Funding from savings accounts is a structural challenge, with potential long-term impacts on financing availability.
- The macroeconomic environment in Brazil remains uncertain, with high interest rates and tax issues posing risks.
- There is a shortage of workforce and high material costs due to inflation and FX rates, impacting construction operations.
- Competition in the landbank market remains tough, particularly in the low-income segment, affecting acquisition strategies.
Q & A Highlights
Q: How is the lack of funding from savings accounts affecting Cyrela and the sector, and do you foresee growth next year despite this challenge?
A: Miguel Maia Mickelberg, CFO, explained that while funding is a structural challenge, Cyrela has not felt significant short-term impacts. Interest rates have slightly increased, but clients are still securing financing. The company does not anticipate changes in strategy due to funding challenges and is cautious about next year's growth projections.
Q: What is the current environment for landbanks, and how does it affect Cyrela's strategy for 2025?
A: Miguel Maia Mickelberg noted that Cyrela evaluates land opportunities individually and maintains a strong portfolio. The company is not focused on increasing launch volumes but rather on maintaining a good ROE and client satisfaction. CashMe's operations are not directly impacted by SBPE funding changes.
Q: What are the biggest risks for Cyrela in 2025, and what are your expectations for cash generation and dividends?
A: Raphael Horn, CEO, identified macroeconomic factors, such as Brazil's tax issues and interest rates, as significant risks. Miguel Maia Mickelberg added that cash generation is projected between BRL300 million to BRL500 million, with dividend discussions planned for the end of the year.
Q: How is Cyrela managing competition for landbank acquisitions, and what is the client mix for high-income products?
A: Raphael Horn stated that Cyrela maintains a high bar for land acquisitions and adheres to a strict budget. The client mix remains diverse, with no significant changes in high-income client demographics.
Q: Can you provide insights into Cyrela's capital allocation strategy and cost dynamics?
A: Raphael Horn emphasized a preference for dividend distribution over share buybacks, contingent on cash availability. Workforce shortages and material costs due to inflation and FX rates are ongoing challenges, but Cyrela is actively managing these issues.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
