MRV Slumps Most Since 2012 as Cancellations Sap Earnings

MRV Engenharia e Participacoes SA, Brazil’s second-biggest homebuilder by market value, declined the most since May 2012 after posting a smaller-than-forecast profit in the fourth quarter.

The stock tumbled 13 percent to 7.35 reais at the close of trading in Sao Paulo. It was the worst performer on the Ibovespa (IBOV) stock benchmark, which decreased 1.1 percent.

The Belo Horizonte, Brazil-based company posted adjusted net income of 72.2 million reais ($30.7 million), less than the average estimate of analysts surveyed by Bloomberg, which called for 131 million reais. Clients canceled purchases of 296 million reais in the fourth quarter, equivalent to 24 percent of gross sales, the highest last year, according to a regulatory filing.

“This result leads us to question our own forecast for the coming year, now implying a 20.6 percent expansion in the bottom line,” Luiz Mauricio Garcia, an analyst at Banco Bradesco SA’s brokerage firm, wrote in a note to clients. “We expect a round of downward revisions to take place.”

The average forecast of analysts surveyed by Bloomberg is for MRV to post adjusted net income of 561.3 million reais this year, which would be an increase of 33 percent from 2013.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net Dennis Fitzgerald, Richard Richtmyer

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