Bloomberg News

Gafisa Drops Second Day on Tenda Sales Plunge: Sao Paulo Mover

January 23, 2012

Jan. 20 (Bloomberg) -- Gafisa SA, Brazil’s fifth-biggest homebuilder by revenue, dropped for a second day after the company reported a 77 percent decline in sales last year at low- income unit Construtora Tenda SA.

Shares declined 0.2 percent to 4.31 reais in Sao Paulo, bringing its two-day retreat to 2.7 percent. The BM&FBovespa Real Estate Index rose 1.5 percent today.

Gafisa’s consolidated new projects fell 21 percent last year and came at the bottom of its forecasted range of 3.5 billion reais ($1.98 billion) to 4 billion reais, according to a regulatory filing yesterday. Project cancellations at Tenda in the fourth quarter contributed to a 75 percent decline in the unit’s new projects in 2011.

“The main concern is now the impact of the cancellation of Tenda’s projects on the financial front,” analysts from Credit Suisse including Guilherme Rocha wrote in a note to clients today in which they reiterated a “neutral” rating on the stock. “Investors should remain cautious on the name since all potential adjustments and revenue reversals are not yet clear.”

Consolidated contracted sales dropped 16 percent in 2011. Tenda’s drop was partly offset by a 10 percent increase for the stand-alone Gafisa unit and a 41 percent gain for high-income unit Alphaville Urbanismo SA, according to the filing.

Tenda will experience “extremely slow” sales in the next three quarters, Chief Financial Officer Rodrigo Osmo said Nov. 23.

“We consider the operating results weak”, analysts from Banco Bradesco BBI SA including Luiz Mauricio Garcia said in a note to clients today, as they placed the stock’s “underperform” rating under review.

The consolidated results “reflect the strategy to maximize profitability, since we decided to hold back Tenda’s new projects and cancel contracts with potential buyers that no longer qualify for bank loans,” Chief Executive Officer Duilio Calciolari said in the filing.

--With assistance from Fabiola Moura in New York. Editors: Brendan Walsh, Karen Eeuwens

To contact the reporter on this story: Katerina Petroff in Sao Paulo at

To contact the editors responsible for this story: David Papadopoulos at; Helder Marinho at

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