Bloomberg News

Urbi Drops Most in Five Months on Cash Flow: Mexico City Mover

February 15, 2012

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

Urbi dropped 12 percent to 18.38 pesos at 10:18 a.m. in Mexico City, after earlier falling as much as 13 percent, the biggest intraday decline since Sept. 22. The benchmark IPC index slipped 0.3 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.

Desarrolladora Homex SAB, Mexico’s largest homebuilder, fell 4.3 percent to 45.3 pesos today, while Corp. Geo SAB, the second-biggest, dropped 4.9 percent to 21.1 pesos.

--Editors: Richard Richtmyer, Brendan Walsh

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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