MONDAY, MAY 12, 2014
SAO PAULO–Brazil’s Gafisa SA (GFA), one of the largest real-estate firms in Brazil in terms of revenues, posted a net loss in the first quarter, as revenues dropped in the period, mainly in its low-income division called Tenda.
Gafisa posted a loss of 39.8 million Brazilian reais ($17.8 million) in the first-quarter, compared with a loss of BRL55.47 million in the year-before period. The Tenda division posted a loss of 37.46 million in the period, the company said in a statement over the weekend.
Gafisa’s net revenue totaled BRL432 million in the first quarter, down from BRL507 million in the first quarter of 2013.
The company is in a restructuring period, and last week named Sandro Gamba as its new chief executive officer, replacing former CEO Duilio Calciolari.
The appointment of a new CEO was part of Gafisa’s plan to split into two companies as it continues to struggle with a 2008 move into the cheaper end of the housing market.
The company is evaluating whether to split, with Gafisa overseeing the high-end division and Tenda responsible for low-income operations. The breakup plan will be presented to the board of directors, and if approved it could be concluded next year, the company said in a statement earlier this year.
Traditionally, Gafisa’s main focus was building middle- and high-end housing, but in 2008 it purchased Tenda, a firm that specializes in the low-income housing market. Years of strong growth and economic stability lifted the salaries of millions of poorer Brazilians and for the first time they started buying houses, which prompted Gafisa to buy Tenda.
But Gafisa has never come to grips with Tenda. Analysts say Tenda’s labor expenses soared and projects were delayed, leading to a series of quarterly losses and a share-price slump. Tenda also cut back on launching new construction projects.