Geo Tumbles Most Since June on Earnings Miss: Mexico City Mover

Corp. Geo SAB (GEOB), Mexico’s second- biggest homebuilder by sales, fell the most in four months after third-quarter revenue and profit came below analysts’ estimates.

The shares plunged 4.9 percent to 16.55 pesos as of the stock market’s close in Mexico City, the biggest drop since June 11. The benchmark IPC index of 35 Mexican companies declined 0.1 percent.

Revenue slipped to 4.5 billion pesos ($346 million) as home sales by volume dropped 11 percent, the Mexico City-based company said yesterday after the close in a stock exchange filing. The average of nine estimates in a Bloomberg survey called for third-quarter sales of 5.1 billion pesos. Adjusted net income rose to 356.6 million pesos, below the 415.2 million pesos average estimate of six analysts surveyed by Bloomberg.

“In contrast to previous reports, the volume of homes titled by Geo showed a strong contraction, which was reflected in the weak quarterly report,” Marco Medina, a Mexico City- based analyst at Grupo Financiero Banco Ve Por Mas SA, wrote in an e-mailed report today.

Earnings before interest, taxes, depreciation and amortization, a measure of profit known as Ebitda, fell 1.5 percent to 1.05 billion pesos, according to the homebuilder.

Geo said its main objective this year has been to cut debt and generate free cash flow to equity. To meet that goal, it’s targeting revenue growth of 5 percent to 8 percent for this year.

Total debt was 13.5 billion pesos as of the end of September, an 8.2 percent decrease from the previous quarter. Net debt fell to 2.4 times Ebitda, from 2.6 at the end of the second quarter.

To contact the reporter on this story: Jonathan J. Levin in Mexico City at jlevin20@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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