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PDG Rallies on Cost Cuts in Restructuring Plan: Sao Paulo Mover

PDG Realty SA, Brazil’s third-biggest homebuilder by market value, surged the most since January after announcing a restructuring plan to cut costs and concentrate operations where profit is highest.

Shares rose 5.4 percent to 3.13 reais at the close of trading in Sao Paulo. It was the best performer on the benchmark Bovespa index, which gained 0.7 percent. The stock fell as much as 4.4 percent earlier today after the company reported that its losses widened in the fourth quarter.

“We don’t want to look back to the past anymore,” Chief Executive Officer Carlos Piani said in a phone interview from Sao Paulo. “Our objective is to be geographically smaller, focusing on the areas that have the best potentials.”

Sao Paulo and Rio de Janeiro states, where most of the homebuilder’s projects are located, are still priorities, Piani said. “But we have only one project in the state of Espirito Santo, for example, and probably won’t stay there,” he said. Piani didn’t provide details on which expenses will be reduced.

PDG’s commercial and administrative costs fell 29 percent in 2012 from 2011, according to a regulatory filing yesterday after the market closed.

“Investors expect that restructuring to improve results in the coming years, and the stock is reacting to that today,” Sandro Fernandes, a trader at brokerage Corval, said in a phone interview from Belo Horizonte, Brazil.

The company posted an adjusted net loss of 1.79 billion reais ($890 million) in the fourth quarter compared with 20.4 million reais a year earlier, according to data compiled by Bloomberg. The homebuilder has slid 5.1 percent this year while the Bovespa has declined 8.2 percent.

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