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Presentation
HeritageSão Paulo - SP
Cyrela
➢ Overview;
➢ History;
➢ Strategic focus;
➢ Operational figures;
➢ Financial indicators;
➢ Portfolio.
AGENDA
2
Cyrela
➢ Overview;
➢ History;
➢ Strategic focus;
➢ Operational figures;
➢ Financial indicators;
➢ Portfolio.
AGENDA
3
CYRELA AT A GLANCE
➢ Leadership position in the industry
➢ 50 years of history
➢ ~ 3.100 employees (construction + administrative)
➢ More than 200,000 clients
➢ Receivables – R$ 4.2 billion (As of September, 2017)
48% 28%34%
Free-float FoundersTop
Shareholders
26.0%36.9%
4
São Paulo
Rio de Janeiro
11%
78%
5%
Middle West
6%South
• National Scale: AA-(bra)• Foreign Currency: BB• Outlook: Stable.
• National Scale: brAA-• Global Scale: BB• Outlook: Negative.
• National Scale: Aa3.br• Global Scale: Ba2• Outlook: Negative.
Solid group with extensive experience in the industry Shareholders’ structure
Geographical footprint (Launches) Rating
Cyrela
➢ Overview;
➢ History;
➢ Strategic focus;
➢ Operational figures;
➢ Financial indicators;
➢ Portfolio.
AGENDA
5
SOLID TRACK RECORD
➢Cyrela is foundedas a land brokerin São Paulo;
➢Expansion to Rio de Janeiro and other states;
➢Cyrela’s IPO;
➢Spin-off of Properties Division ( Cyrela Commercial Properties);
➢1st debenture offering (out of a serie of 6 debentures);
➢1st receivables back securities (CRI’s) offering (out of a serieof 2 CRI’s);
➢Launch of facebook sales channel;
➢6st debenture offering;
➢5th CRI’s emission.
60’s 80’s and 90’s ´00-’10 ´11-´16
➢Vertical integration;
➢Land broker
➢Developer
➢Cyrela becomes listed company.
Foundation Integration Expansion Consolidation
6
➢Dividend payout: approximately 25% of its
adjusted net income
➢ Internal committees in line with the
best corporate governance and risk
mitigation practices
➢Corporate governance practices, based on
principles that privilege transparency
➢Business management. Follow-up and
accountability models are based on strict ethical
principles
➢Board of directors made up of at least 5
members
➢At least 20% should be independent
members
➢ Ensure at least 25% of the total stock is available
for trading
➢Adopt public offer procedures that favor the
shareholding dispersion
➢Minimum standards for quarterly disclosure of
information
➢ Stock option program
➢Allow the company and its subsidiaries to
attract and retain Eligible Persons
Transparency
Independent and strong board of directors
1st
homebuilder listed on Novo
Mercado
Clear internal politics
Well defined key business
process
Align shareholder
interests
Oreganic
growth
Key internal
process control
Focus on key
segments
(income profile)
Solid financial
discipline
Focus on
profitability
over growth
CORPORATE GOVERNANCE & STRATEGY
1 Source: Cyrela
7
Strategy
Corporate Governance
CYRELA HIGHLIGHTS
Leadership position in the industry and key markets
Fully integrated real estate company
(from land acquisition to selling)
Exposure to all customer segments
Fully professionalized management team with deep
industry
Solid balance sheet (largest real estate company in Brazil
by market cap)
Expertise in designing innovative projects
Strong Brand: The most admired Real estate company
8
1
2
3
4
5
6
7
RECENTS AWARDS
Cyrela by Pininfarina was the winner of the 2016 iF DesignAward in the Architecture and Interiors category. With 60 years oftradition, this german award is one of the most respected in thesector.
The 2nd best developer and homebuilder - 2016.
Cyrela received the Top Employer Certification, given to the world’s best employers, in 2015.
Cyrela is in Valor Econômico newspaper’s Anuário Inovação BrasilRanking of Brazil’s 100 most innovative companies. It ranks 4th in the Engineering, infrastructure and Logistics category, standing out for the implementation of processes to shorten deadlines, cut down on waste and increase productivity at work.
9
Winner in the category of Brand Communication with the“Identidade Cyrela” [Cyrela Identity] case, about the brandingproject the Company launched in 2013
In 2017, Cyrela won the 3rd place for Incorporating category and 4th place in Construction category for the “Prêmio Top Imobiliário”.
Internal
SUSTAINABILITY PRACTICES – SOCIAL INITIATIVES
External
Improvement of well beingof Cyrela workers and
their families
Eliminate illiteracy among Cyrelaworkers
Increase family income throughprofessional training for worker’s
wives
Professional training for youngrelatives of workers
Positive impact in local communities
Cyrela institute (vehicle for workingwith NGOs and developing
programs)
First professional experience for young adults from low income
communities
10
Objectives Examples os initiatives
Objectives Examples os initiatives
Sustainability and acessibility handbook
➢ Sustainable Production
➢ Environmental policy for suppliers
➢ Benchmark in waste management
➢ Recycling Program
➢ CarboboNeutro® Program
Eco-efficiency guidelines for projects:
Selective waste collection
Water-saving devices
Collection of used batteries
Individual water and gas meters
Power-saving devices
Oil collection for recycling
Optimization of resources
Acessibility
Bicycle parking lot
Waste management
Technological development
Nature-friendly construction
Cyrela moves foward in defining integrated eco-efficient actions.
SUSTAINABILITY PRACTICES
ENVIRONMENTAL INITIATIVES
11
Distinctive environmentally-friendly practices
Cyrela
➢ Overview;
➢ History;
➢ Strategic focus;
➢ Operational figures;
➢ Financial indicators;
➢ Portfolio.
AGENDA
12
Execution➢ Cost control
➢ Systems and process improvement
➢ Corporate Engineering
➢ Bonus – focus on deliveries
Company Longevity➢ Leader’s development➢ Meritocracy➢ Cyrela’s cultura
Financial Discipline➢ Focus on margin➢ “Cost Culture”➢ Leverage Reduction
Back to Cyrela “DNA”➢ Focus on mid to high-end products➢ Living as a brand➢ MCMV through Cury
BACK TO BASICS
...PROCESS THAT STARTED IN 2010
Governance➢ Commitees➢ Processes and policies
Back to Basics
13
Back to Basics
Partnerships
Startups
Closing / Acquisition
Final Position
2006 2007 2008 2009 2010 2011 2012 ... 2017
5 11 11 9 7 4 4 ... 4
REDUCTION IN THE NUMBER OF JV’S, KEEPING THE
ONES THAT ARE IN LINE WITH CYRELA’S STRATEGY
SHIFT IN STRATEGY HAS ALREADY TRANSLATED INTO
MORE ORGANIC OPERATIONS
Cyrela’s share in projects (%) Cyrela’s share in construction site management (%)1 2
1 Share in projects launched 2 Cyrela + JV’s15
100%80%60%40%20%0%
2016
2007 44%
2008 28%
2009 34%
2010 47%
2011 60%
2012 81%
2013 91%
2014 94%
2015 95%
2017 96%
93%
+100.0%+80.0%+60.0%+40.0%+20.0%0%
76%
2010
65%2007
2008 59%
2009
77%
2011 81%
2012 73%
2013 71%
2014 82%
2015 78%
2017 74%
77%2016
Company should keep working with partners on development
Cyrela has been focusing on using own engineering
GROSS MARGIN
Cyrela expects the gross margin to grow in a sustainable pacegoing foward
16
29.9%
32,8%
24,6%
Gross Margin Gross Margin EX Ret / Riserva Golf
2014
MORTGAGE RATE INCREASE BRINGS MORE SALES CANCELLATION
2016
Unit value
Interest Rate (TR+)
Loan term
1st installment - SAC
Monthly Income
R$400,000
9% p.a
35 years
R$ 3,068
R$ 12,273
R$400,000
11,5% p.a
35 years
R$ 3,678
R$ 14,712
+ 2.5 p.p.
+20%
ExampleAssumptions: Loan-to-Value 80% (LTV)
25.0% 25.0%
17
Income Comitment
RECOGNIZED BRANDS AND DIVERSIFIED PROTFOLIO
➢SP➢RJ➢SOUTH➢MIDDLE WEST
JV’sNew Businesses
18
Financial strenght, credibility and entrepreneurship
THE WAY CYRELA PLAYS IN THE REAL ESTATE MARKET
USING AN INTEGRATED BUSINESS PLATFORM
Luxury / High
Middle
Economic
19
Cyrela
➢ Overview;
➢ History;
➢ Strategic focus;
➢ Operational figures;
➢ Financial indicators;
➢ Portfolio.
AGENDA
20
➢ PSV of R$ 47.5 bn (100%) and R$ 41.6 bn (%CBR).
➢ 75% of landbank acquired through swaps.
(R$ billion)
LANDBANK
OthersSouthSão PauloRio de Janeiro
14.3
Total
47.5
33.2
14.3
23.5
9.3
14.3
3.5 6.2
Swap agreement
21
Cyrela – Landbank (100%)
Direct employees
OPERATIONAL HISTORY
22
6.6
2012
5.6
2011
8.0
2010
7.7
2009
5.7
2008
4.8
-27%
+18%
6M17
1.3
2016
2.9
2015
2.9
2014
5.8
2013
-44%
+9%
6M17
2.8
2016
9.7
2015
8.4
2014
13.1
2013
27.9
2012
23.4
2011
26.1
2010
27.6
2009
26.4
2008
18.3
-35%
+10%
6M17
1.3
2016
2.8
2015
3.4
2014
5.7
2013
7.2
2012
6.0
2011
6.5
2010
6.2
2009
5.2
2008
4.4 820984946
514
2014
1,264
2013
1,373
2012
1,460
2011
1,728
2010
1,512
20092008
-14%+50%
20162015
Launches - PSV (R$ billion) Launched units (thd.)
Pre Sales - PSV (R$ billion)
CYRELA
OPERATING RESULTS
➢ 20 projects launched in 6M17, 32 in 2016, 91 in 2015 and 53 in 2014;
➢ 6.1 thd units sold in 6M17, 8.7 thd in 2016, 9 thd in 2015 and 14.6 thd in 2014.
23
4.5
2008
1.2
7.6
6.0
2009
1.7
7.9
6.3
2010
1.6
3.8
5.5
2.9
5.6
3.9
2011
1.7
6.6
4.6
2012
2.0
5.8
4.9
2013
1.0
2.9
5.7
2014
0.5
2.2
0.7
2015
2.4
1.7
9M17
1.2
0.5
1.8
2016
CBRPartners
2016
2.8
2.1
0.6
2015
3.4
2.6
0.8
2014
5.7
4.7
1.0
2013
7.2
5.1
2.1
2012
6.0
4.4
1.6
2011
6.5
5.3
1.2
2010
6.2
4.8
1.4
2009
5.2
4.0
1.3
9M17
2.0
1.5
0.5
2008
4.4
3.1
1.3
Launches - R$ Billion Pre-Sales - R$ Billion
SALES
* Considering the sales LTM
(R$ billion)
24
Northeast
7%South
6%
Rio de Janeiro 20%
São Paulo - Other Cities
9%
São Paulo56%
North and Others
2%
-27%
+10%
9M17
2.0
2016
2.8
2015
3.4
2014
5.7
2013
7.2
2012
6.0
2011
6.5
2010
6.2
2009
5.2
2008
4.4
2Q16
30.8%
1Q16
29.1%
4Q16
29.1%
3Q16
27.2%
3Q17
32.7%
Pre Sales - PSV (R$ billion) Sales per Region
Sales speed* - 12M
SALES BY VINTAGE
(R$ million)
25
Sales Speed of the last 12 months attained 32.7% in 3Q17.
321
703142
695
583
267
277
267
191
277
1,675
+27.4%
3Q17
730
3Q16
573
9M179M16
105
+19.7%
2,006
1,156
61%
50%
18%
31%
50%
12%
12%
22%
16%
4%
5%
3Q17
2Q17 47%
1Q17 47%7%
4Q16 78%10% 6%
3Q16 84%
2%
In 15 months
In 12 months
In 9 months
In 6 months
In 3 months
Previous Years Launches
Previous Quarters Launches
Quarter’s Launches
Sales by vintage of lauchings Sales by vintage of lauchings – Sos 12M
INVENTORIES
➢ R$ 6,2 billion of inventory (R$ 5,2 billion %CBR).
26
6,212
3,556
2,656
2Q17
6,441
3,975
2,466
1Q17
6,646
4,193
2,453
4Q17
6,537
4,135
2,402
3Q16
6,412
4,271
2,142
3Q17
Em AndamentoConcluído
Inventories – Market value (R$ MM) Inventories – Delivery date
Inventory to be
deliveredTotal Consolidation Equity Method
Finished 2,656 2,220 436
12 Months 1,565 1,389 175
24 Months 1,089 832 258
36 Months 902 713 189
48 Months - - -
Total 6,212 5,154 1,058
27
TOTAL INVENTORY
-3.6%
Inventory
3Q17
6,212.2
Price
change
-31.4
Sales of
launches
3Q17
-266.6
Launches
3Q17
531.9
Sales of
inventories
-463.0
-221.7
-241.4
Inventory
2Q17
6,441.3
Inventory under construction Finished inventory
Minas Gerais
0.4%
Espírito Santo
0.8%
Middle West
3.9%
North
2.3%South
9.4%
Northeast3.6%
Rio de Janeiro
25.4%
São Paulo - Other Cities
20.4%
São Paulo
33.6%
Changes in Inventory Inventory Breakdown
(R$ million)
➢ R$ 2,656 million of finished units inventory (vs. R$ 2,466 million in 2Q17).
(R$ million)
FINISHED UNITS INVENTORY
28
+8%
Finished Inventory
3Q17
2,656.5
Price Change
-84.7
Deliveries
496.8
Finished Inventory
Sales
-221.7
Finished Inventory
4Q16
2,466.1
Espírito Santo
1.9%
Northeast
0.9%South
15.3%
Middle West
3.2%North 2.4%
Minas Gerais 8.4%
Rio de Janeiro
27.1%
São Paulo -Other Cities25.3%
São Paulo
15.4%
Finished Units Finished Units Breakdown
7.5
2.1
5.4
-11.2%+15.2%
9M17
13.1
8.2
4.9
2016
21.3
11.1
10.2
2015
24.0
14.8
9.1
2014
20.8
9.2
11.6
2013
25.0
11.8
13.2
2012
24.1
15.2
8.9
2011
▪ 4.5 thousand units delivered in 3Q17, in 14 projects. In the year, 13.1 thd. units in 41 projects.
▪ Middle + MCMV: 3.1 thousand units delivered in 7 projects in 3Q17. In the year, 8.2 thd. units delivered in 18
projects.
▪ The units delivered in 3Q17 represent launches PSV of R$ 1.5 billion. In the year, the PSV delivered represented
R$ 3.8 billion.
(Units thd)
DELIVERED UNITS
Middle+MCMV
High End
29
+28% +11%
3Q16
1,381
392
990
3Q172Q17
1,197
435763
2,252
-31%
9M179M16
5,498
1,462
4,036
1,532
643
889
3,784
1,532
AGENDA
Cyrela
➢ Overview;
➢ History;
➢ Strategic focus;
➢ Operational figures;
➢ Financial indicators;
➢ Portfolio.
30
571
-144
151
448
661
498
600
2011
660
2013 201520142012 2016 9M17
FINANCIAL RESULTS - YTD
(R$ million)
* Data before “CPC” (IFRS 10 and 11) “Ex-RET” 31
Ex RET
Gross Margin Net Margin
Net Income
31.4% 32.3% 32.7%32.1%
34.6%33.3%
27.5%
2011 2012 2013 2014 2015 2016 6M17
12.3%
8.8%
13.4%
11.4%10.3%
4.5%
2011 2012 2013 2014 2015 2016 6M17
FINANCIAL RESULTS
(R$ million)
Margin
32
591
826
614
-26%+4%
3Q16(pro forma)
3Q172Q17
154
247
147
-40%-4%
3Q16(pro forma)
30.7%
3Q17
24.6%
2Q17
26.7%
-141
3Q16
14
1.8%
3Q17
-7
2Q17
Gross Revenue Gross Profit and Gross Margin
Net Income and Net Margin
COVENANTS
>= 1,5
ou <0
<= 0,80
>= 1,5
ou <0
0.17
0.07
-0.09
-0.03
3.58
3.61
4.24
7.329.33
-17.81-44.00 -43.57
2,288.90
-205.88-3.32
TOTAL DEBT+ PROPERTIES PAYABLE - SFH DEBT - DISPOSALS
EQUITY
RECEIVABLES + PROPERTY FOR SALE
NET DEBT - PROPERTIES PAYABLE - UNRECOGNIZED COSTS AND EXPENSE
EBIT
FINANCE COSTS
RETURN ON EQUITY
➢ Return on Equity (net income LTM / Average Equity LTM (ex - minorities) attained -1.9%
* ROE: Net income / Average shareholders’ equity, excluding minorities
34
Ex-RET
2Q17
-1.5%
1Q17
1.6%
4Q16
2.5%
3Q16
3.7%
3Q17
-1.9%
HEALTHY LIQUIDITY AND DEBT INDICATORS
(R$ million)
* Data before “CPC” (IFRS 10 and 11)
1Q17
22.8%
2016
25.1%
2015
22.2%
2014
32.8%
2013
39.6%
2012
41.5%
35
Gross Debt 2Q17 (pro
forma)
3,4
2,1
1,2
Net Debtand Cash
Equivalents
Cash and Cash Equivalents
1,6
1,4
Term
3,1
1,7
1,3
Gross Debt 3Q17
3,1
1,9
1,2
IndicatorsTotal Debt
DebtEx-SFH
Net Debt/ Equity
22.8%
Average CostW/o SFH: 102.6% CDI
SFH: TR + 9.3% p.y.
Duration 1.5 year 1.5 year
Short Term 43% 29%
Long Term 57% 71%
Debt
Net Debt / Equity
TRANSFERS, PAYOFFS AND TRUST OF DEEDS
▪ In 3Q17, the volume of transfers, payoffs and trust of deeds attained R$ 858 million, 16.1% higher
than 2Q17 and 24.2% higher than 3Q16.
(R$ million)
UnitsVolume
(Thd. units)
432574
461
203
218
22666
+16.1%+24.2%
2Q17
739
53
3Q17
858
3Q16
690
55
TransfersTrust of DeedsPayoffs
+24.8%+27.3%
2Q17
3.1
2.2
0.1
0.7
3Q17
3.9
2.9
0.2
0.8
3Q16
3.1
2.0
0.2
0.9
* Previous periods are presented in pro forma way, considering MAC thru Equity Results.
BUSINESS, CASH FLOW AND ACCOUNTING CYCLES
1 Source: Cyrela 2 Note: (1) Cycle I: In terms of % VGV of one project; Cycle II in terms of % revenues related to one project
Land swap or acquisition
Development12-24 months
Sales & Construction36 months
Consuption of 15% in case of acquisition
Low cash comsuption
5% cash recovery Recovery of 25%
- - -Revenues as percentage of completion method
Delivery3 – 12 months
Final 70% of VGV
100% of revenues recognized
Launch
3% consumption due to marketing
3% of revenue recognition
Cash Flow
Accounting
70%
(15%)
0%
100%
Cash flow
Accounting
Business cycle
37
CASH GENERATION*
(R$ million)
*Ex dividends, buyback and stake acquisition38
▪ Cash generation of R$ 285 million (R$ 182 million ex-Tecnisa) in 3Q17, vs. a cash generaton of R$ 64 million in 2Q17.
103
83
384
-73
18284
-164
3Q17
285
2Q17 (pro
forma)
64
9M1
6
9M1
7
-237
467
-20
Operational Cash BurnStake Acquisition
Cyrela
➢ Overview;
➢ History;
➢ Strategic focus;
➢ Operational figures;
➢ Financial indicators;;
➢ Portfolio.
AGENDA
39
MANDARIM
SÃO PAULO (2006)
➢ The tallest residential
building in latin america (2006);
➢ Ballroom on the 41st floor;
➢ First project with different
typologies in the same building;
40
CIRAGAN
SÃO PAULO (2007)
➢ First project to
aggregate a residencial
and a commercial tower in
the same project
41
PARQUE ALFREDO VOLPI
SÃO PAULO (2007)
➢ Very luxury
product, with unit
prices over US$ 5 mi
42
JK 1455
SÃO PAULO (2009)
43
LE PALAIS
RIO DE JANEIRO (2010)
➢ Architecture inspired by two historical buildings in the complex;
➢ The historical buildings were restored and adapted for the leisure
areas;
44
CENTRAL PARK MOOCA
SÃO PAULO (2010)
➢ First mover in a industrial area of São Paulo (Mooca)
➢ Innovative product, creating a park inside the project
➢ All of its 560 units were sold in 10 days
45
LE PARC
SALVADOR / BAHIA (2012)
➢ Largest Cyrela’s project;
➢ 18 towers, 1.138 units;
➢ PSV of R$ 1 billion (2013
value);
➢In the middle of the project,
there is a 10,000 sqmt leisure
facility
46
RISERVA GOLF
RIO DE JANEIRO (2014)
➢ Unique project in Barra da Tijuca;
➢ 2016 Olympics golf course;
➢ Average sqm. Price: from R$ 25 thd to R$ 30 thd.47
CYRELA BY PININFARINA
SÃO PAULO (2014)
➢ Unique project in São Paulo (Vila Olímpia);
➢ Price per sqm.: R$ 25 thd
48
ONE SIXTY
SÃO PAULO(2015)
HERITAGE
SÃO PAULO(2017)
CONTACT IR
Cyrela Brazil Realty S.A. Empreendimentos e Participações
Av. Brigadeiro Faria Lima, 3.600 – 12th Floor
São Paulo - SP – Brasil
Zip Code 04538-132
Investor Relations
Phone: (55 11) 4502-3153
www.cyrela.com.br/ir
Statements contained in this press release may contain information which is forward-looking and reflects management'scurrent view and estimates of future economic circumstances, industry conditions, company performance and thefinancial results of Cyrela Brazil Realty. These are just projections and, as such, exclusively based on management'sexpectations of Cyrela Brazil Realty regarding future business and continuous access to capital to finance the Company'sbusiness plan. Such future considerations rely substantially on changes in market conditions, government rules,competitor's pressure, segment performance and the Brazilian economy, among other factors, in addition to the riskspresented on the released documents filed by Cyrela Brazil Realty, and therefore can be modified without prior notice.
51