Brazil Homebuilder’s Profit Falls 12.6%

BRAZIL · BUSINESS

Direcional, a Brazilian builder of affordable homes, posted a record profit margin but lower profit in the third quarter. Its mid-income arm Riva slowed sharply while borrowing stayed costly.

Direcional Engenharia, a Brazilian builder of affordable and mid-income homes, said on Monday 9 November that third-quarter net profit fell 12.6% to 200.7 million reais (US$36.4 million). Revenue was flat at 1.16 billion reais (US$210.2 million), but its gross margin, the share of sales left after building costs, hit a record 43.1%.

The weak spot was Riva, its middle-income brand, whose profit fell 22.2% to 109.3 million reais (US$19.8 million). Reais are converted at the PTAX rate, the central bank’s official daily dollar rate, of 5.5146 per US dollar on 9 November.

What Direcional Reported

Gross profit rose 7.7% to 499.5 million reais (US$90.6 million). Direcional’s own release says the margin gain came mainly from selling older stock, which carries higher margins than new launches.

New launches totalled 1.35 billion reais (US$245.3 million) in expected sales value, down 37.1% from a year earlier. Sales after cancellations were 1.30 billion reais (US$236.0 million), down 20.7%.

The company says it held back launches until late in the quarter, with 8 of 10 projects opening from 15 September. It names events such as the World Cup, holidays and changes in how buyers are assessed and approved as reasons sales converted more slowly.

Riva Slows While the Core Arm Holds Up

Riva launches fell 44% to 665.9 million reais (US$120.8 million), yet still made up 49% of the group total. Riva net sales fell 38% to 510.4 million reais (US$92.6 million).

The Direcional brand, whose homes generally sit inside the subsidised Minha Casa, Minha Vida programme (My House, My Life), saw net sales slip only 3.4% to 791.1 million reais (US$143.5 million). Riva’s homes generally fall in Faixa 4, the programme’s middle-income band for homes priced up to 600,000 reais (US$108,800), or are sold outside it.

Faixa 4 loans draw on the FGTS, a workers’ severance savings fund, at 10.5% a year for its members, against 12% or more on the open market, the federal government says. Riva’s backlog of revenue still to be booked from signed sales is 1.8 billion reais (US$326.4 million), up 10% from a year earlier, at a 46.0% margin.

Why Rates and the Caixa Stoppage Matter

Brazil’s central bank held its Selic benchmark rate at 13.75% on Wednesday 4 November, after cutting it from 14.00% on Wednesday 16 September. Its rate-setting committee, Copom, said the global backdrop had turned more adverse and that risks to inflation lean upward.

Direcional’s release also points to a September work stoppage at Caixa Econômica Federal, the state-owned lender that pays out its buyers’ home loans. Contracts worth about 200 million reais (US$36.3 million) went unsigned in the quarter, and 56.2 million reais (US$10.2 million) of payouts had not arrived by quarter-end, but the company says both were settled in October.

What Prediction Markets Say

Polymarket, a platform where users bet real money on outcomes, gives 91.5% to no change at Brazil’s December rate decision as of 12:57 p.m. ET on Tuesday 10 November. It prices a 6.7% chance of a quarter-point cut, 1.6% for a bigger cut, 1.1% for a quarter-point rise and 0.6% for a bigger rise, with US$69,021 traded on that market.

Why we show this: prediction markets turn real-money bets into a live probability that moves within minutes of the news, which is why investors, campaigns and newsrooms in the United States now follow them closely. We show them next to polls and official results, never instead of them.

What It Means for You

For a US investor, Direcional is a window onto how a 13.75% policy rate squeezes Brazilian homebuyers. Its shares trade in São Paulo as DIRR3 on B3, Brazil’s main stock exchange.

The subsidised arm held up far better than Riva, which suggests government-backed demand is steadier than private-credit demand. Riva’s FGTS-funded band sits between the two, so its sales are the number to watch.

Direcional says its October launch schedule already counts 7 products. More is on the Brazil hub, in our guide to the Selic rate for foreign investors and in the guide to who runs Brazil’s economy.

What Is Not Known

Direcional’s results release does not say that Riva will shift its launches toward the subsidised programme. We could not confirm such a plan at the company, and comments by its chief executive on the results call were not checked.

The release gives no split of Riva sales between the subsidised band and homes priced above 600,000 reais. It is also not known how much of the fall reflects costly credit and how much reflects the late timing of launches.

Frequently Asked Questions

What did Direcional report for the third quarter?

Net profit fell 12.6% to 200.7 million reais (US$36.4 million) on flat revenue of 1.16 billion reais (US$210.2 million). Gross margin reached a record 43.1%.

What is Riva?

Riva is Direcional’s middle-income brand, with projects generally in the subsidised Faixa 4 band for homes up to 600,000 reais (US$108,800) or sold outside the programme. Its profit fell 22.2% to 109.3 million reais (US$19.8 million) in the quarter.

What is the Selic rate?

Selic is Brazil’s benchmark interest rate, which the central bank held at 13.75% on 4 November. High rates make private mortgages costlier for buyers.

Sources: Direcional Engenharia, 3Q26 results release of 9 November 2026 and operating preview; Central Bank of Brazil, Copom statement no. 282 of 4 November 2026; Central Bank of Brazil, PTAX exchange rate (5.5146 reais per US dollar, 9 November 2026); Brazilian federal government, Minha Casa, Minha Vida Faixa 4 rules, updated 26 October 2026; Polymarket, Bank of Brazil decision in December market, 10 November 2026, 12:57 p.m. ET.