Brookfield Incorporacoes SA (BISA3), Brazil’s fourth-largest homebuilder by revenue, fell to the lowest level in almost three years as first-quarter profit fell 94 percent on higher building costs and contract cancellations.
Shares dropped 9.4 percent to 4.45 reais at 10:43 a.m. in Sao Paulo after touching 4.44 reais, the lowest intraday price since July 2009. The benchmark Bovespa index fell 2.4 percent.
“Results were weak,” analysts Guilherme Rocha, Daniel Gasparete and Vanessa Quiroga of Credit Suisse Group AG wrote in a report today. “Despite recognizing management’s efforts to put the company on the right track, we find that there is still potential for further cost overrun.”
Net income dropped after an increase in the number of potential buyers who pulled out of contracts at the same time that building and operational costs increased, Brookfield said in a statement. Earnings decreased to 4 million reais ($2.01 million), from 65.8 million reais a year earlier, trailing the 61.1 million reais average estimate of six analysts in a Bloomberg News survey. Revenue dropped 8 percent to 672 million reais.
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