Direcional (DIRR3) Q1 Sales Jump 19% to R.6B on Housing Demand

Direcional Engenharia (DIRR3), Brazil’s largest low-income housing builder, extended its growth streak into 2026 with a Q1 operational preview that shows accelerating sales momentum even as the broader economy contends with elevated interest rates.

Direcional’s Q1 2026 results, reported Thursday by Reuters, showed net sales of R$1.6 billion (~$308 million), a 19% increase from the same quarter last year. Gross sales climbed even faster, rising 29% to R$1.9 billion (~$365 million)—a gap that suggests the company is converting more of its pipeline into closed contracts while keeping cancellations under control.

Launches Grow Modestly as Sales Outpace Supply

The company launched developments with a combined general sales value (VGV) of R$1 billion (~$192 million) in the quarter, 12% above Q1 2025. The pace marks a continuation rather than an acceleration: a year ago, Direcional launched R$901 million in VGV across 17 projects, with 75% under the Direcional brand and 25% under its mid-income Riva segment.

That sales are growing faster than launches (29% gross vs. 12% VGV) points to strong absorption of existing inventory—a dynamic that has characterized the entire Minha Casa Minha Vida (MCMV) affordable housing segment in recent quarters. Direcional, headquartered in Belo Horizonte and operating across multiple Brazilian states, has been a primary beneficiary of the program since its relaunch under the Lula administration in 2023.

Cash Generation Modest but Positive

Operating cash generation totaled R$13 million (~$2.5 million) in Q1—a modest figure compared to peer Cury (CURY3), which reported R$93.4 million in Q1 cash generation. The difference reflects Direcional’s broader geographic footprint and its heavier capital deployment into land acquisition and construction across lower-income markets outside the São Paulo–Rio de Janeiro axis. First-quarter cash tends to be seasonally weaker for builders that front-load launches early in the year.

Q4 2025 Set the Stage

The Q1 operational preview builds on a strong fourth quarter in 2025, when Direcional posted adjusted net profit of R$211.4 million (~$41 million), up 27.7% year-on-year. Revenue in that quarter rose 33% to R$1.2 billion (~$231 million), slightly ahead of the R$1.21 billion LSEG consensus estimate. The company achieved a return on equity of 44% for the full year, among the highest in the sector.

For investors tracking Brazil’s affordable housing cycle, Direcional’s Q1 data reinforces the broader sectoral theme: MCMV-linked builders continue to outperform because subsidized FGTS credit insulates their buyers from the Selic rate environment that has pressured mid- and high-income segments. With the MCMV budget expected to reach roughly R$190 billion (~$36.5 billion) in 2026 and a presidential election cycle that incentivizes housing spending, the policy backdrop remains supportive—though any post-election fiscal tightening could test the sustainability of these growth rates.

Related Coverage: Direcional Hits 44% ROE on Record Q4 EBITDA • Direcional Balances Expansion and Profitability in Q1 2025 • Cury (CURY3) Profit Surges 63% in Q4

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