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Urbi Plunges Most in Three Years on Cash Flow: Mexico City Mover

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Feb. 14 (Bloomberg) -- Urbi Desarrollos Urbanos SAB, Mexico’s third-largest homebuilder by sales, plunged the most in three years after reporting that a measure of cash flow last year trailed the company’s projections.

Urbi dropped 19.2 percent to 16.88 pesos at the close in Mexico City, the biggest decline since Oct. 10, 2008. Desarrolladora Homex SAB, Mexico’s largest homebuilder, fell 9.3 percent to 42.93 pesos today, while Corp. Geo SAB, the second-biggest, dropped 14.4 percent to 18.99 pesos. The benchmark IPC index of 35 Mexican stocks fell 1 percent.

Mexican homebuilders have struggled to produce positive cash flow as they shifted their focus to government-subsidized apartment buildings that cost more to build. Urbi’s free cash flow to equity, or FCFE, was negative 3 billion pesos ($235 million) to negative 3.5 billion pesos for 2011, according to preliminary results published yesterday. The company had projected it would be negative 800 million pesos for the year.

Cash flow concerns are “materializing,” Credit Suisse Group AG analysts led by Vanessa Quiroga wrote in a research note e-mailed today. The industry’s outperformance this year on the Mexican benchmark stock gauge “has been unjustified,” they said.

Urbi rose 32 percent this year though yesterday, after the industry posted the worst performance on the benchmark index in 2011.

The homebuilder was hurt in the last three months of the year by “delays in the expected availability” of government subsidies, the company said in the statement yesterday.

To contact the reporters 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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