EBITDA margin

The revision of costs to incur higher than the National Index of Civil Construction (INCC) and the increase of operational expenses affected the Company’s EBITDA, which came to the end of 2010 at R$ 803.3 million, 11.3% below the R$ 911.3 million registered in 2009. The EBITDA margin was 16.5% in 2010 and 22.3% in 2009.

EBITDA (R$ thousand))

2010

2009

Variation(%)

Profit before income tax and social charges

813,996

941,025

- 13.5%

(-) Agra earning

-

-80,632

-

(+) Financial result

(65,232)

14,533

- 548.9%

(+) Depreciation and amortization

8,885

6,518

36.3%

(+) Goodwill amortization and others

50,648

29,863

69.6%

EBITDA*

808,297

911,307

- 11.3%

EBITDA margin (%)

16.5%

22.3%

12.3%

(*) The calculation method does not deduct financial expenses related to the Housing Financial System (SFH) and capitalized debentures, which amounted to R$ 60.8 million in 2010.


Sales Expenses

Sales expenses are linked to the real estate development area of Cyrela, such as show rooms and media, which accounted for the largest portion of the total expenditure. In 2010, sales expenses amounted to R$ 401.8 million, of which 37.5% were assigned to sales stands and 40.0% to advertising and media. Total expenses reached R$ 255.8 million in 2009.

General and Administrative Expenses

Some factors such as third-party expenses, mostly related to the SAP Project, have also significantly influenced the increase of overhead expenses. Cyrela needed to contract specialized third-party IT and back-office services to support the implementation of the system in several regions of Brazil.

In 2010, the Company concluded the adaptation of the personnel structure which was started back in the second semester of 2009 with the aim of supporting the future growth of the Company. This resulted in a 33.2% increase over the total volume of salaries and social charges in comparison to 2009. Such increase is due to the implementation of own development, engineering, credit and collection back-office and transfer to Living, which responded for 3.4% of the total expenses with personnel along the year.

Another influencing factor was the completion of the organic structure for development and engineering areas in the Northern regional branch (cities of Belém and São Luís). And the inauguration of a new office in Brasília to serve the Middle-West region with development and back-office structures represented 3% of the total annual expenditure with personnel.