4Q14
Belo Horizonte, January 13th, 2015 - Direcional Engenharia S.A., one of the largest homebuilders in Brazil, focused on developing large scale and low-income projects, operating in all regions of Brazil, discloses hereby its operating figures preview for the fourth quarter of 2014 (4Q14). The results are considered preliminary as they do not consolidate results from projects managed by our partners. Unless clearly indicated, the information included in this document is expressed in Brazilian Reais (R$) and the PSV is % Direcional.
NOTICE TO THE MARKETIN 2014 LAUNCHES REACHED R$ 1.7 BILLION, NET SALES OF 1.6 BILLION AND DELIVERY OF 1.7
BILLION. IN THE 4Q14, TWO PROJECTS WERE LAUNCHED UNDER THE PROGRAM MCMV LEVEL 1, REPRESENTING A PSV OF R$ 194 MILLION.
LAUNCHES
Launched PSV
In 4Q14, the Company launched two projects under the Program
MCMV Level 1 in the city of Contagem-MG, totaling PSV of R$ 194
(R$ million)
Development
MCMV Level 1
+14%
-36%
2,565
523
1,654
456
million, representing 56% of the total figure for such period. In 2014, total PSV launched under the MCMV Level 1 reached R$ 1.2 billion.
In the development segment, Direcional launched three projects. In Luziânia/GO we started the 2nd phase of the project Conquista Residencial Ville, which is included in the scope of MCMV Level 2 and has been presenting strong demand since the launch of the 1st phase in 2Q14. We also launched in Contagem/MG the 2nd phase of the project Sublime Oasis Residence, targeted at upper-middle
segment customers. Finally, we concluded the sales process of the
919
189
730
4Q13
304
72
232
3Q14
348
194
4Q14
154
2,041
2013
1,198
2014
new Headquarters of Direcional Engenharia through a Sale & Leaseback transaction, as previously announced.
The total PSV launched in the 4Q14 totaled R$ 348 million, representing 2,725 units. The average price of the units launched was R$ 103.9 thousand, excluding the commercialization of Direcional Engenharia´s Headquarters.
The table below provides consolidated information for the projects launched in the 4Q14:
Projects Launched 4Q14 Month City | PSV | Units Launched | Segment |
Projects Launched 4Q14 Month City | Total % Direcional # of Units Total (R$'000) (R$'000) Launched Units (All Phases) | Segment | |
1 Conquista Residencial Ville - 2nd Phase December Luziânia - GO 13,568 9,498 128 1,328 Low-income |
5 Nova Sede Direcional Engenharia December Belo Horizonte - MG 54,000 54,000 1 1 Commercial | ||||
Total | 351,773 | 347,703 | 2,725 | - |
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CONTRACTED NET SALES
OPERATING PREVIEW 4Q14Contracted Net Sales
(PSV R$ million)
Development
MCMV Level 1
+12%
-38%
2,652
610
1,634
Contracted net sales reached R$ 331 million and 2,800 units in the
4Q14.
In 2014, contracted net sales summed up R$ 1.6 billion. The MCMV Level 1 segment accounted for 73% of the total net sales throughout the period.
937
207
730
296
63
232
331
194
137
2,041
437
1,198
4Q13
3Q14
4Q14
2013
2014
The table below provides consolidated information for contracted net sales in the 4Q14 and 2014 versus the 3Q14, 4Q13 and 2013:
Contracted Net Sales 4Q14 3Q14 4Q13 2014 2013
(a) (b) (c) (a/b) (a/c) (d) (e) (d/e)
Contracted PSV % Direcional (R$'000) 330,680 295,614 936,927 11.9% -64.7% 1,634,306 2,651,524 -38.4% MCMV Level 1 193,965 232,148 730,249 -16.4% -73.4% 1,197,617 2,041,272 -41.3% Development 136,715 63,466 206,678 115.4% -33.9% 436,689 610,251 -28.4%
# of Units 2,800 4,969 12,703 -43.7% -78.0% 18,835 36,650 -48.6% MCMV Level 1 2,448 4,640 12,100 -47.2% -79.8% 17,284 34,372 -49.7% Development 352 329 603 7.0% -41.6% 1,551 2,278 -31.9% Average Price (R$/unit)* 122,612 82,122 78,845 49.3% 55.5% 94,183 80,824 16.5% VSO (Sales over total supply) 26.6% 31.4% 55.1% -4.8 p.p. -28.5 p.p. 67.4% 78.4% -11.0 p.p.
VSO (Sales over total supply) - Ex-MCMV
Level 1 13.6% 7.0% 21.1% 6.6 p.p. -7.4 p.p. 35.2% 46.0% -10.8 p.p.
(*) Average price figures do not consider the commercialization of Direcional Engenharia´s Headquarters.
SALES CANCELLATIONS
Cancellations in the 4Q14 totaled R$90 million, equivalent to 21.4% of the gross PSV of the period.
Cancellation ¹
Cancellations
Contracted PSV - % Direcional (R$'000)
MCMV Level 1
Development
% Cancellations / Contracted PSV (Total)
% Cancellations/Contracted PSV
39.6% 55.7% 26.6% -16.1 p.p. 13.1 p.p. 43.2% 27.5% 15.8 p.p.
(Development)
1- Sales cancellations figures do not include cases in which a customer transferred credits from one unit previously acquired to another in our inventory.
2
OPERATING PREVIEW 4Q14The following chart shows the evolution of sales cancellations in the previous quarters, in terms of number of units, as well as the Company's efficiency to resell these units.
It worth mentioning that 77% of the cancelled sales in 2014 have been resold within the year, whereas 70% of the cancelled sales in 4Q14 were resold in the same quarter.
Sales Cancellations and Resale of Cancelled Units
(Units)
85%
47%
95%
73%
93%
71%
85%
52%
81%
61%
83%
75%
74%
64%
70%
90%
77%
1,920
2,495
203 172
461 439
479 446
490 415
613
496
632
525
617
455
633
444
1,633
1,472
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
2013
2014
Cancellations
Resale (until 4Q14)
% Resale ( 4Q14)
Resale in the Period
SALES SPEED
In the 4Q14 Direcional achieved a VSO of 27%. Excluding launches in the MCMV Level 1 segment, in which 100% of the units are sold simultaneously to the project´s launch, the VSO in the quarter was 14%. The VSO of the development segment was impacted (i) positively by the commercialization of Direcional Engenharia´s Headquarters and (ii) negatively by the short period of commercialization for projects launched in December.
Sales-over-supply ratio (VSO)
(% Total PSV)
Sales-over-supply ratio (VSO)
(% Units)
55%
55%
84%
83%
21%
14%
13%
31%
7%
27%
14%
20%
13%
16%
64%
11%
51%
12%
4Q13 1Q14
2Q14 3Q14 4Q14
4Q13 1Q14
2Q14
3Q14
4Q14
Without MCMV Level 1 project
With MCMV Level 1 project
Without MCMV Level 1 project
With MCMV Level 1 project
VSO = Contracted Net Sales / (Initial Inventory + Launches during the Period)
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OPERATING PREVIEW 4Q14PROJECTS DELIVERED
Direcional delivered eleven projects / phases in 4Q14, totaling 8,013 units and a PSV of R$ 737 million. In 2014, deliveries reached
R$ 1.7 billion, comprising 18,554 units. The table below provides consolidated information for the projects delivered in 4Q14:
Delivered Projects - 4Q14 Date City
Total
(R$'000)
PSV
% Direcional
(R$'000)
# Units Segment
1 Orgulho do Madeira - Partial October Porto Velho - RO 108,775 108,775 1680 MCMV - Level 1
2 Colônia Carioca - Partial October Rio de Janeiro - RJ 13,230 13,230 180 MCMV - Level 1
3 Bella Città Total Ville - 3rd Phase November Marituba - PA 47,995 47,995 640 RET 1
4 Residencial Macapabá - 2nd Phase November Macapá - AP 134,958 134,958 2218 MCMV - Level 1
5 Residencial Orgulho de Minas II November Belo Horizonte - MG 14,880 14,880 240 MCMV - Level 1
6 Paranoá Parque - Partial November Paranoá - DF 66,734 66,734 928 MCMV - Level 1
7 Parque dos Resedás December São João da Boa Vista - SP 32,895 32,895 387 MCMV - Level 1
8 Brisas do Parque - 2nd Phase December Manaus - AM 49,150 49,150 192 Medium
9 Del Rey December Belo Horizonte - MG 30,766 30,735 128 Medium
10 JHSF Manaus December Manaus - AM 176,219 176,219 479 Medium
11 Total Ville Macaé - 3rd Phase December Macaé-RJ 31,010 15,505 402 RET 1 | |||
Total | 752,427 | 736,891 | 8,013 |
INVENTORY
By the end of 4Q14, Direcional´s inventory figure reached 2,655 units and total PSV of R$ 846 million.
Inventory | PSV in Inventory (R$'000) | % Units in Inventory % | |||
Inventory | Total | % Direcional | % Units in Inventory % | ||
Under Construction | 719,238 | 628,547 | 74.3% | 1,916 | 72.2% |
Finished Units | 239,410 | 217,604 | 25.7% | 739 | 27.8% |
Total | 958,649 | 846,151 | 100.0% | 2,655 | 100.0% |
Inventory Track Record
(R$ million)
Inventory by Launch Period
(% PSV)
2013
Inventory by Region
(% PSV)
725
813
4%
846
16.7%
2014
28%
21%
2012
Southeast 50%
4Q13
3Q14
4Q14
Finished Units
26%
19%
North
Midwest 11%
38%
Finished Units
Under Construction
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LAND BANK
OPERATING PREVIEW 4Q14In 4Q14, the Company acquired three plots of land with potential to build 6,746 units and PSV of R$ 942 million.
Direcional has acquired a plot of land in Distrito Federal with potential to develop 5,638 units targeted at low-income customers. The other two plots are located in the city of Rio de Janeiro, one targeted at low-income customers and the other directed to the middle income segment.
With these acquisitions, Direcional's land bank ended the year with PSV of R$ 9.2 billion. The average cost of these plots was equivalent to 10% of PSV, whereas 98% of the payment will be settled through swaps.
Statements contained in this document concerning the business perspective, projections of operating and financial results and references to the growth potential of the Company, are mere predictions and were based on expectations and Management estimates in relation to the future performance of the Company. While the Company believes that such forecasts are based on reasonable assumptions, it does not ensure that they are achieved. Expectations and estimates that are based on the future prospects of the Company are highly dependent on market behavior, Brazil's economic and political situation, of existing and future state government regulations, industry and internati onal markets, and therefore, are subject to changes that are beyond the control of the Company and its management. The Company makes no commitment to publish updates or revise expectations, estimates and forecasts contained herein arising from information or future events.
CONTACTS
IR Team (+55 31) 3214-6450
ri@direcional.com.brwww.direcional.com.br/ir
GLOSSARY
Land bank - land held in inventory with the estimate of future PSV of the same.
Classification of developments by Direcional, according to the economic segment to which they are intended:
MCMV Level 1 | Residential developments under construction contract, in the form of turnkey contracts under the program "MCMV," contracted directly with CEF for families with monthly incomes up to R$ 1,600.00. The properties of this segment have the final price determined by CEF and its purchase may be conditionally subsidized by the government. |
Low-Income | Residential developments with average price per unit up to R$ 190 thousand. |
Low-Income - major size | Popular large-size residential developments with at least 1,000 units in the same site and average price per unit up to R$ 190.0 thousand. |
Medium | Residential developments with average price per Unit between R$190 thousand and R$400 thousand. |
Upper-middle | Residential developments with average price per Unit over R$ 400 thousand. |
New Market - A special listing segment of BOVESPA, where companies adopt differentiated practices of corporate governance, which exceed the traditional segment requirements. Directional joined the New Market on November 19, 2009.
Swap - a system of land purchase whereby the owner of land receives in payment a determined number of units of the undertaking to be built on the land.
Special Taxation System ("RET1"): System of taxation applicable to projects with housing units with sales value up to R$ 100.0 thousand, in which case the tax rate is 1% of gross revenue.
Contracted Sales - PSV arising from all real estate sales contracts concluded in a given period, including the sale of Units launched in the period and the sale of Units in Inventory.
PSV - Potential Sales Value (PSV) - The total value potentially obtained by the sale of all Units of a given residential development at the launch price. There is a possibility that the PSV launched is not realized or differs significantly from the Contracted Sales value, since the amount of Units effectively sold may be different from the amount of Units Launched and/or the actual selling price of each Unit may differ from the launch price.
PSV Launched: Potential Sales Value (PSV) of Units Launched over a given period.
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