Cyrela Rises on Higher-Than-Expected Margins, Extra Dividend

Cyrela Brazil Realty SA, Brazil’s biggest homebuilder by market value, rose the most in four months after reporting profit margins that exceeded analysts’ estimates and announcing an extraordinary dividend payment.

Shares rose 3.7 percent to 16.65 reais at the close of trading in Sao Paulo, its biggest gain since Nov. 19. It was the best performer on the benchmark Bovespa index, which fell 0.6 percent.

Cyrela’s gross margin, a measure of profitability, expanded for the eighth straight quarter, reaching 32.8 percent in the three months through December, according to a regulatory filing yesterday after the market closed. That compares with an average estimate of 32 percent among six analysts surveyed by Bloomberg.

That margin was boosted by a cut in taxes by the Brazilian government in December, which helped to push net income to 249.1 million reais ($124 million), Luiz Mauricio Garcia, Alain Nicolau and Carlos Firetti, analysts at Banco Bradesco SA (BBDC4)’s brokerage unit, wrote in a note to clients dated today. Brazil reduced by the end of last year taxes on certain projects to 4 percent from 6 percent.

“Results were strong,” the Bradesco analysts wrote as they reiterated a buy recommendation on the stock. “The company’s prospects look very healthy considering that general and administrative expenses dropped sharply and should be flat in nominal terms in 2013.”

Cyrela said it will ask shareholders at an April 30 meeting to approve a plan to distribute an extra 50 million reais in dividends.

Cyrela fell 6.9 percent this year, while the Bovespa declined 9.4 percent during that same period.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at

To contact the editor responsible for this story: David Papadopoulos at

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