MONTERREY, Mexico--(BUSINESS WIRE)--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, today announced financial results for the second quarter (“2Q18”) and first six-month (“6M18”) periods ended June 30, 2018. All figures presented in this report are expressed in nominal Mexican pesos (Ps.), unless otherwise stated.
2Q18 and 6M18 Highlights:
- Units sold rose by 14.4% to 5,329 units in 2Q18 from 4,660 units in 2Q17; while in 6M18, 10,076 units were titled, a 13.4% increase compared to 8,884 units sold in 6M17. This growth is due to the operating startup of the projects that initiated operations in 4Q17, along with 5 new projects launched in the first half of 2018.
- Net Revenues increased 23.8% to Ps. 2,276.7 million in 2Q18 compared to 2Q17. In 6M18, net revenues grew 21.5% to Ps. 4,261.7 million compared to 6M17, as a result of a better sales mix and a higher average sale price, which was up 9.5% to Ps. 427.2 thousand in 2Q18 and 8.8% to Ps. 422.3 thousand in 6M18.
- EBITDA grew 54.4% to Ps. 336.4 million in 2Q18, compared to Ps. 217.8 million in 2Q17; and 41.6% to Ps. 506.6 million in 6M18 from Ps. 357.8 million in 6M17, primarily due to volume growth, a better sales mix and higher prices. EBITDA margin increased 2.9 percentage points to 14.8% in 2Q18 and 1.7 percentage points to 11.9% in 6M18.
- Net Result increased 69.3% to Ps. 72.6 million in 2Q18, compared to Ps. 42.9 million in 2Q17, derived from improved operations in 2Q18. In 6M18, net result was Ps. 130.7 million, a 34.1% drop compared to Ps. 198.4 million reported in 6M17. This was mainly due to an FX gain of Ps. 271.7 million in 6M17 derived from the peso appreciation, contrary to a FX loss of Ps. 32.7 million registered in 6M18. Earnings per share were Ps. 0.26 in 2Q18 and Ps. 0.47 in 6M18.
- The free cash flow (FCF) generated in 2Q18 was Ps. 199.7 million, reporting a significant growth compared to the Ps. 9.2 million in 2Q17, as a result of an increase in EBITDA and lower tax payments. During 6M18, the FCF decreased 56.2% to Ps. 81.5 million due to land acquisitions and a greater use of working capital.
Mr. René Martínez, Javer’s Chief Executive Officer commented, “We are very pleased to present our second quarter financial and operating results, which were above expectations for this period of the year. The first half of the year was marked by the electoral processes; in addition to the Presidential election, local elections were held in all states where we are present. Nevertheless, this process did not impede our solid growth in our key figures.
As we have previously stated, our shift in product offering to have a greater middle-income and residential sales mix, drove an increase in the gross margin, both in pesos and percentage. The benefits we’ve gradually accumulated will help us to reduce the potential price increases in some of our key inputs, which are expected to take place in the following months.
The consolidation of our sales mix continues to take shape, as 2 new projects began titling units during the quarter, both focused on the middle and residential segments. In addition, the 3 projects that we started in 1Q18 have been very successful and an increase in the sale price of each prototype we offer was achieved. This drove our 23.8% revenue growth, despite the absence of commercial lots sales during the period, while in 2Q17, Ps. 22 million were recognized for these sales.
In relation to the subsidy program, it is important to mention that since April of this year, the maximum amount to be granted per subsidy was increased from Ps. 85 thousand to Ps. 98 thousand for those workers with a monthly salary that is less than 2.2 UMAs. As of July 9th, 41.1% of the total 2018 subsidy budget has been granted. In our case, 40.4% of the units titled during the quarter were made using this program compared to 38.0% in the same period of 2017.
Likewise, during the quarter we generated positive free cash flow, after interest and tax payments. We estimated to make a greater use of cash for land reserves acquisitions during the first half of 2018, which we hope to formalize in the coming months; this will allow to align the pipeline for the second half of 2019.
Furthermore, we expect to launch 12 new developments during the second half of the year, 7 of them focused on the residential segment and the rest in the middle-income segment. Moreover, we will be opening our first two developments in Playa del Carmen, Quintana Roo, which is part of our growth strategy, as initially we only had developments in Cancun. With this we intend to consolidate and gain market share in the state.
On another matter, we are proud to report that Javer is celebrating its 45th anniversary this year, coincidentally the same time that INFONAVIT has been operating, which is the largest mortgage provider for the acquisition of housing in the country. During this time of coexistence, Javer has titled more than 200,000 units through Infonavit and has been the leader in its loans’ system since 2014. As of June 30th, our market share is 9.9% considering the total of Infonavit loans for new housing, which represents 6.9% more than the previous year. Taking into account the total amount of Infonavit loans our market share is 5.2%.
In these 45 years, change has been the only constant for Javer, which has caused us to have an adaptable "DNA" to any circumstance either in a period of prosperity as in times of crisis.
Finally, given that we have not identified any factor and/or economic indicator that makes us think of an industry slowdown for the second half of 2018, we reiterate double-digit growth in revenues, and we modify our EBITDA projection as we expect an increase of at least 7.5%, the high range of our initial guidance, with a generation of neutral free cash flow.”
For a full version of this earnings release with financial statements, go to: http://www.javer.com.mx/investors.php