Brazil’s Biggest Builder Boosts Sales Even With Top Boss in Jail

  • Company’s net revenues advanced 23 percent last year
  • PwC approved results citing ‘undetermined effects’ of probe

Odebrecht Engenharia e Construcao SA, Brazil’s biggest builder, posted revenue growth the same year the top manager of its controlling group was jailed as part of a corruption probe.

The builder’s net revenue rose 23 percent to $17 billion in 2015, compared to $13.8 billion a year earlier, according to a copy of its financial results obtained by Bloomberg on Friday. The company finished the year with a cash position of $2.5 billion, and $1 billion in net debt. The company’s $750 million in perpetual senior unsecured bonds were up 6.1 cents this week, to 40 cents on the dollar.

Odebrecht SA’s perpetual notes plunged 54 percent in the past year after the builder became the focus of a kickback investigation at state-controlled oil producer Petroleo Brasileiro SA dubbed as Carwash, which has ensnared some of Brazil’s biggest economic conglomerates and top politicians. Almost one year ago Marcelo Odebrecht, then Chief Executive Officer of Odebrecht, was jailed as part of the investigations. He is now serving a 19-year prison sentence for crimes including corruption and money laundering.

The auditor of the company’s results, PricewaterhouseCoopers LLP, approved the full-year financial statement but indicated an exception for "undetermined effects" of several matters related to the Carwash investigation, according to the document. Odebrecht said in the earnings release that specialized firms were hired to evaluate the level and extent of its compliance program and the risk of non-compliance with international anti-corruption laws.

In March, Odebrecht published a statement on its website pledging “definitive cooperation” with the Carwash probe. The company also said it wanted to contribute to a better Brazil after negotiations started in December for a leniency agreement that would ease restrictions on its business. At the time, the company spokesman confirmed the deal includes participation from the former CEO and scion of the billionaire family.

The company’s fourth-quarter earnings before interest, taxes, depreciation, and amortization, or Ebitda, rose 68 percent to $676 million. Its backlog at the end of 2015 amounted $28 billion about $2 billion less than the previous year. Fifty-eight percent of it was in Latin American countries, followed by 21 percent in Brazil and 20 percent in Africa, with 1.2 percent in other locations.

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