Construction companies' 1st quarter results should show efforts to rebuild margins amid rising infla

Higher costs put pressure on the profitability of companies in the sector, which are trying to improve their business amid a more challenging scenario.

Most of the construction companies listed on the Brazilian stock exchange have already released their operating previews of results for the first quarter, anticipating what will be seen in the release of the balance sheets. In general, the companies brought positive results, although some still have problems improving their margins.

This is because the current economic scenario is challenging for the construction sector.

On the one hand, higher inflation makes spending more expensive for companies, which cannot always pass them on to customers since higher prices tend to reduce demand. On the other hand, the cycle of high-interest rates makes access to credit more expensive, which is crucial to keep the real estate market warm since most people take out loans to fulfil their dream of owning a home.

In the last earnings season, analysts' view of the numbers was primarily negative. Construction companies focused on the lower classes were the most impacted, as they have less room to pass on prices since customers with lower purchasing power have tighter budgets.