SERVICIOS CORPORATIVOS JAVER, S.A.B. DE C.V.
Javer Announces 2Q19 and 6M19 Results with an Improved Gross Margin and Free Cash Flow Generation Despite Volume Contraction
Thursday, July 18, 2019 4:55 PM
MONTERREY, NUEVO LEON, MX / ACCESSWIRE / July 18, 2019 / Servicios Corporativos Javer S.A.B. de C.V., (BMV: JAVER) (“Javer” or “the Company”), the largest housing development company in Mexico in terms of units sold, announces its financial results for the second quarter (“2Q19”) and first six-month periods ended June 30, 2019. All figures presented in this report are expressed in nominal Mexican pesos (Ps.), unless otherwise stated.
2Q19 and 6M19 Highlights:
- Units sold decreased 29.5% to 3,755 units in 2Q19 compared to 5,329 units in 2Q18 and declined 28.0% to 7,253 units in 6M19 from 10,076 units in 6M18, since 40.4% of the units sold during 2Q18 and 34.1% during 6M18 were subsidized. Additionally, 10 projects that titled around 2,000 units in 6M18 were depleted during the second half of 2018; the new projects to replace them will take place during the second half of 2019.
- Net Revenues shrank by 20.9% to Ps. 1,800.8 million in 2Q19 and 19.8% to Ps. 3,418.1 million in 6M19, due to the volume contraction derived from the cancellation of subsidy programs during 2019, however, this effect was mitigated by the improvement in the sales mix and in the average sale price during both periods.
- EBITDA decreased by 28.9% to Ps. 239.1 million in 2Q19 and 26.7% to Ps. 371.6 million in 6M19, primarily due to the decline in the volume of units sold.
- Net Result was Ps. 31.5 million in 2Q19 and Ps. 47.7 million in 6M19 derived from the abovementioned volume contraction. Earnings per share reached Ps. 0.11 in 2Q19 and Ps. 0.17 in 6M19.
- Free cash flow (FCF) reached Ps. 61.9 million in 2Q19 compared to Ps. 199.7 million in 2Q18, affected mainly by the volume decrease. In 6M19, FCF was Ps. 6.4 million compared to Ps. 81.5 million in 6M18 for the same reasons as described above for 2Q19.
Mr. René Martínez, CEO of the Company stated, "Today we have the pleasure to present the financial and operating results for the first half of 2019, which are in line with our annual guidance and in accordance with our expectations for the first two quarters of the year.
With respect to the comparison with 2018 periods, the decrease in the number of units sold and the main indicators were caused by: i) the cancellation of the 2019 subsidies programs, which affected volume, as we had foreseen at the beginning of the year; together with ii) the depletion of 10 projects during the last months of 2018, which we expect to replace during the second half of 2019.
Despite this effect, it is important to note that our austerity plan, which was implemented at the beginning of the year, has allowed us to substantially lower expenses with respect to the 2018 periods. Likewise, the improvement in the product mix led to an 11.6% increase in the average sale price during 2Q19, which together with the efforts to lower costs, resulted in a 143-percentage point growth in the gross margin compared to 2Q18. In addition, effective inventory management supported the generation of a positive free cash flow during the period.
During 2Q19, we launched 7 new projects throughout 5 of our business units. We are very pleased to mention that one of these projects represents our incursion into the state of Guanajuato, which is a new market for Javer. This project will be managed by our Queretaro office, and we hope to quickly consolidate our presence in this new market in order to analyze the possibility of increasing operations in this great state. The second half of 2019 will also be very intensive in terms of project openings, we expect to begin 8 more projects, 2 of which are focused in middle-income housing and 6 focused on the residential segment.
Despite the volume contraction, we continued to retain market share leadership within the INFONAVIT system, both in terms of loans granted for new housing with 8.4% market share as well as for total loans with 4.3% market share.
With respect to relevant matters at the sector level, we are still waiting for the new housing policy to be released in the following months. On the other hand, INFONAVIT announced during the month of May the increase in the amount of loans for those beneficiaries with the lowest income (less than 2.8 UMAS). Undoubtedly, this increase will benefit the most vulnerable segment of the population, who previously depended on a subsidy for the acquisition of a home. This program was launched on July 3.
It is also important to emphasize that various industry players are developing a range of alternatives for granting loans. Specifically, one financial institution, with support from companies within the industry, is working on a program to grant mortgages to the non-affiliated sector to IMSS and INFONAVIT. This initiative will undoubtedly provide an opportunity to acquire a new home to all this demand that was not addressed at all in the past years; we believe that if this program is able to flourish, it will be favorable for all of us who currently comprise the industry.
Regarding refinancing, we continue making progress in the revision of documents in order to close the transaction in the coming weeks.
In summary, the results obtained during this first half and the actions undertaken by the various industry players leave us very comfortable in ratifying our 2019 guidance of consistent revenues with respect to 2018 revenues, EBITDA growth of between 2.5% and 5.0% and the positive generation of free cash flow."
For a full version of this earnings release with financial statements, go to: http://www.javer.com.mx/investors.php.
IR, CSR and Planning Director
Tel. +52 (81) 1133-6699 Ext. 6515
SOURCE: Servicios Corporativos Javer S.A.B. de C.V.