Good afternoon, ladies and gentlemen. Welcome to the conference call for earnings for Q2 2021 for Plano & Plano. We inform that this event is being recorded, and all the participants will be in the listen mode only during the presentation of the company. Next, we will begin the Q&A session when further instructions will be given. If any participant needs assistance during this call, please dial asterisk zero to reach the operator. This event is also available through webcast and may be accessed through the Plano & Plano Investor Relations website, https://ri.planoeplano.com.br/en, clicking on the banner Webcast. The slides of the presentation are available for download on the webcast platform. The information is available in Brazilian reais and in BR GAAP and IFRS applicable to real estate developers in Brazil except where stated otherwise.
Before proceeding, let me mention that any forward-looking statements made in today's conference call regarding the business outlook, forecasts, and financial and operational targets is based on beliefs and assumptions of Plano & Plano's management and the information currently available to the company. Forward-looking statements are no guarantee of performance. They involve risks, uncertainties, and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of the company and may lead to results that may differ materially from those expressed in such forward-looking statements. We have today the presence of Mr. Rodrigo Von, Mr. Rodrigo Luna, and Mr. João Hopp, respectively, CEO, Vice President, and CFO and Investor Relations Officer at Plano & Plano.
Now, I would like to pass the floor to Mr. Rodrigo Luna, Vice President, who will begin the presentation. Sir, you may proceed.
Thank you very much. Good afternoon. Welcome to the conference call Q2 2021 for Plano & Plano. The highlights. As we said, we had Q2 with a strong evolution in sales and revenue and with challenges due to higher inflation. We reached another historical record of the company in terms of sales and revenue. BRL 361 million in net new sales record, 134% above Q2 2020, and BRL 333 million in net revenue, 68% above the same period in 2020. Seven launches, a PSV of BRL 354 million, 42% above the same period last year. In the last 12 months, more than BRL 1.5 billion launched in PSV.
With a good cash generation, BRL 34 million, due to a good performance in sending contracts to the bank, and we distributed BRL 40 million in dividends and an expressive ROI of 52%. As already foreseen, the price increases in costs puts pressure on our profitability. These price increases are being passed on to our prices through price increases. We are now returning to lower middle class. We had launches in this segment and with Fatto Torres de São José and another launch also in the south zone of São Paulo. We hope in the medium term to reach 20%-30% of our portfolio in this segment. In the operational field, strengthening of the sales area and strong growth that we expect the next few years. In terms of operation, investments in ESG, risk management, and technology that will allow us to really mitigate the problems in the market.
We have the constant concern with human resources, stock options, and aligning the company's management with the interests of the shareholders. As perspectives for 2021, we continue firm in our forecast for strong growth. The end of the pandemic and economic recovery, together with a strong demand for housing. We see clear signs of good perspectives for the second semester in the next few months. In spite of a moment of pressure on costs and also tighter margins, the housing deficit is gigantic, resilient and growing. We also see new taxes. We will be stronger and in the largest market in Brazil for low income. As I said, the cost increases that we suffered are being passed on to our prices. The new launches already have new costs, so we believe that the worst is over in terms of margins. From now on, we hope recovery.
We will have a gradual recovery during second semester, trying to go back to the numbers of 2020. Investments made in marketing campaigns and sales structure will have their cost diluted during the second semester, also contributing to increase sales. We trust in a sustainable growth and with progress in the structure of the company, always in a robust way and with a good capital structure. Now I pass the floor to our Financial Director, Mr. João Hopp.
Good afternoon. It's a pleasure to be with us in our conference call. Please, let's go directly to slide number seven. Net sales in this quarter represented BRL 361 million, 7.7% higher than the BRL 335 million in Q1 2020, and 133.8% higher than the BRL 154 million in Q2 2020. This result represents a new sales record in a quarter for Plano & Plano. We had a constant growth in sales since 2020 when we had problems due to the pandemic. The job sites have been maintained since the beginning of the pandemic, and the sales area adapted itself to the restrictions using digital channels and tools in a more intensive way.
Next slide, please. The company launched seven projects in Q2 totaling a PSV of BRL 354 million, 42.2% higher than Q2 2020. After reduction of the restrictions demanded by the pandemic at the end of the Q1, the company once again accelerated the launches, although the São Paulo plan still has some restrictions. The company's participating in launches in the first Q1 was 100% in Q2 too. Operational data resulted on June 30, 2021, a sales oversupply of 43.1%, 4.3 percentage points higher than the VSO in March 31, 2021. This strong increase in sales was due to products launched in the previous quarter of 2021. In the last months, Plano & Plano reinforced its sales team and increased its commercial management and is working intensely with partners to accelerate the VSO during 2021.
The company closed the quarter with 8,115 units and a PSV of BRL 1.7 billion in inventory. These numbers represent a reduction of 1.5% in units, an increase of 2.5% in PSV in comparison with the previous quarter. One of the objectives of Plano & Plano is to maintain a minimum in inventory of ready units through its speed of sales, selling all the units before the end of the job and installation of the condominium. On June 30, 2021, the company had 32 ready units in its inventory, representing 0.4% of its inventory in units, total inventory units. This result comes from the capacity to launch ready projects that are adequate for the target public in the region and with focus from the team.
At the end of Q2 2021, the inventory of the land bank was 1.2 million square meters with the potential sales of BRL 9.6 billion. This land bank is sufficient for some years of launches, but we're evaluating the purchase of new plots of land since the problems for the short term have been solved, but we have a medium and long-term vision. During Q2 2021, the company bought two new plots of land in São Paulo. The inventory is concentrated in the metropolitan region of São Paulo, 94% of the projects and 6% of PSV is in the city of São Paulo.
Total cost of the land bank, 3% will be paid in cash and 97% as we receive cash from sales in, as we call it, financial exchange. Now slide 12, please. The pandemic did not interrupt our projects. Since the beginning of the sanitary restrictions, the company maintained its operations with extra care in the job sites and diligence in terms of the team that's handled supplies. At the end of second quarter of 2021, the company had 30 projects in progress, 725,000 sq m of construction. The second quarter of 2021, we obtained another record in net revenue. The net revenue of the company reached BRL 333 million in Q2 2021, 68.1% higher than BRL 198 million obtained in Q2 2020, and 6.6% higher than the BRL 312 million in Q1 2021.
This result was due specially to the performance of sales and inventory of products launched in the previous periods, and the recognition of revenue of the projects already sold in accordance with the methodology Percentage of Completion. The increase could have been even higher if it weren't for the effects of the pandemic COVID-19 that affected the whole global economy. The need to maintain social distancing makes it difficult to handle our sales activities. This challenge is being overcome with interactions through digital channels, and this was intensified since the beginning of 2020. The digital tools are present in practically all the client's journey, and almost all contracts are signed digitally. The gross profit of the quarter reached BRL 100 million, showing a growth of 39.4% in comparison with Q2 2020 due to the good performance of sales in the previous period.
In terms of gross margin, a drop of 6.2 percentage points in relation to Q2 2020, and adjusted gross margin reached 31.6%. The main factor that reduced margins is the increase in the prices of raw materials due to the rupture in the supply chain of many materials, and also the booming construction market in Brazil. The company is gradually passing on this inflation to the prices. With the imbalance of the productive chain caused by the pandemic and the quick acceleration of INCC index, we need to really balance an ideal balance point and accelerate sales, and also pass these price increases on to our sales price. The growth of operational expenses in Q1 2020 was lower than the growth of net revenue during 2020. Commercial expenses went from 13.7% of revenue in first semester 2020 to 12.3% in first semester 2021.
Administrative expenses went from 7.3% in the first semester of 2020 to 6.4% in the first semester 2021. Operational expenses of Q2 2021 had values 107% higher in relation to the previous years. In terms of sales expenses, communication, marketing, expenses with sales in Q2 2020 and Q2 2021, a change in the profile of the payment of commissions, a reduction in the way where clients pay the sales commission directly to the salesperson, and this is included in the sale price. Marketing, propaganda, communication expenses represented 3.5% of the revenue in the first semester of 2021, a reduction in relation to the 4.1% spent in the first semester 2020.
Nevertheless, especially in Q2 2021, these expenses were higher, especially due to three factors: launching of the campaign, raffling of a free apartment from Plano & Plano, inauguration of five new stores, and reopening of also Plano & Plano's central office. Administrative expenses annual growth can be seen in the expenses with employees. In terms of services rendered, the company had an increase in expenses of BRL 0.6 million in treasury due to the issuing of debentures and BRL 1.6 million increase in IT expenses with the implementation of new system. The growth of expenses was due to two reasons, increase in headcount and participation in results. In headcount, the accelerated growth of launches required reinforcing the sales structure, the sales team. A relevant action was the creation of Plano & Casa with a sales team that are now employees.
This new structure had 46 employees at the end of June, and the objectives are to increase sales. In the provision for participation in the results 2020, the provisioning and accrual of the impact happened in December. While in 2021, the accrual recognized in the results of the portion of 1/12 per month of the amount expended for the year represented BRL 4.7 million in first semester 2021. Next slide. Net profit reached BRL 17.6 million in Q2 2021. Year- to- date, the profit reached BRL 67.6 million and had an increase of 37% in relation to the first semester of 2020. In comparison with the previous quarter, there was a reduction of 9.3 percentage points in net margin. The accumulated margin in the year, 10.5%, 2 percentage points below the first six months of 2020.
This reduction is due to the increase in the prices of raw materials of construction, and the growth of expenses and the growth of gross profit. Next slide. In the quarterly comparison, there was a growth of 35.9% in the adjusted EBITDA, going from BRL 79.3 million in first semester 2020, and reaching BRL 107.8 million in first semester 2021. In Q2 2021, adjusted EBITDA totaled BRL 38.9 million, a reduction of 15.7% in relation to the previous quarter, as a result of the increase in cost of raw materials and higher expenses in the quarter. On June 30, 2021, the gross debt reached BRL 344.7 million, 2.2% lower than the BRL 352.4 million recorded in June 30, 2020.
In terms of cash, equivalent cash and deposits of BRL 246.2 million , the net debt reached BRL 98.5 million at the end of the quarter, 13.7% lower than BRL 114 million in the previous month. The net debt on equity went from 0.79 on June 30, 2020 to 0.34 in June 2021, due to the reduction in the net debt. The highlights, BRL 40 million were distributed as dividends, and which was decided on April 27, 2021. Another important highlight in this quarter is cash generation. Excluding the effect of dividends, the company's operation presented a cash generation of BRL 34.1 million in Q2 2021, and BRL 27.9 million, year- to- date, with great efficiency in the performance of the payment. We would like to conclude here, and we are available for questions. Thank you.
We would like to begin now the Q&A session. To ask questions, please dial asterisk one. If your question is answered, you may remove your question from the queue, dialing asterisk two. Our first question comes from Alex Ferraz, Itaú BBA.
João, also my friend Von, I have two questions. The first in relation to your strategy to migrate to low income and medium low income to mitigate the costs, since it would be easier to increase prices. In your land bank of BRL 10 million VGV, do you have an estimate for this new segment? How much of the land bank can be used for medium low income? The second question, in a point where João talked a lot, the expenses with personnel. Did you have any results from the new headcount, or do we need to wait to have more growth to see the results of these investments in personnel? It's a great pleasure to talk to you, Rodrigo Luna.
I will answer the first question concerning middle low class. Historically, we have a lot of tradition in this wage bracket. In the low income, we had 80% of our portfolio in this area. During the next few years, roughly half and half between low income and medium low income. Due to the tax crisis of the previous president in 2016, we stopped launching middle low class projects, and we concentrated on low income only. Now we have a different situation. Since we have this capacity to produce on a large scale for lower middle class, we began to go back to this wage bracket. We made a launch in the city of Jundiaí. We are also planning one in the south zone of São Paulo.
As I said in the opening, our strategy between 2016/ 2023, 20% or 30% of our portfolio should be in this segment, medium low income. Some plots of land that we have and that are eligible for this type of product will be used, and we will also be buying new plots of land in new businesses. Alex, concerning the DNA, the personnel structure. Without considering the Plano & Casa, our number of employees is well adjusted for this phase, and this Plano & Casa has its team. We hired these people, we should be hiring a little more in Q3, but they are not having the performance that we projected. There is a learning curve. They are being trained. We are analyzing the performance of sales every week. This cost will be diluted as time goes by, according to the performance of the company.
The idea is to decrease the customer acquisition cost. With the advantage of being employees, we will focus on sales where we believe this is more important for us. We have the objective. When we need something special for a certain project, we will do this. Now looking at 2022, if we look at the numbers, here we have 18.8% of revenue. This number will be diluted with the growth of the company, this number for expenses.
Thank you.
Our next question comes from Jorel Guilloty , Morgan Stanley.
Good afternoon. Thank you. The first is your product for medium-low class that you will launch. We saw the margins 35%-40%. Do you have an idea of the margins for the medium-low income projects? Second question, investments in personnel. Do you have a schedule when you believe this growth will help dilute these expenses? Your EBITDA has changed. From now on, will it go back to the previous numbers, lower? Thank you.
Good afternoon. Great pleasure to talk to you. Traditionally, the medium income, low income projects have some similarities with low income. When these new costs have demanded that we increase prices, the low income class have more sensitivity to price. We want to really raise prices due to the increase in materials. In the medium term, I can tell you the margin for middle class products will be a little higher than the margins of the low income class. Concerning employees and EBITDA margin, our EBITDA margin has been maintained. We haven't changed our margin. One of the key indicators for the variable compensation of everyone in the company did not change. EBITDA margin fell in this quarter, and we will work to bring it back to the levels that we had last year.
Our work will be concentrated on recovering margins. The effects that we had were due to a backlog of units that were already sold at the end of last year and beginning of this year for a certain price. After passing the contracts to the Federal Savings Bank, we receive a fixed amount. In new projects already with new prices, we have some products for low income with better prices, and the trend is for us to have a gross and EBITDA margins that we had in the past. We want to bring EBITDA margin to this level. The sales people haven't been paid. It's a team for the sale of apartments, and the structure must sell more apartments than they are selling now. The structure of new people, these are being trained for sales to low income.
We expect they will have a better performance in the second semester of this year. If the project doesn't pay for itself and if the costs go up, this project can be reviewed, the sales project.
Another question. Which part will you have in low income, 25%? What is your goal?
We're building the plans for launches in 2022/ 2023. We imagine that by 2023, it will represent 20%-30% of our portfolio low income. As we do the planning, as we finish the details, 20%-30% in two years.
Okay. Thank you.
Thank you.
Thank you. Our next question comes from Elvis Credendio, BTG Pactual.
Good afternoon, Rodrigo Luna. João. I have two questions. The first on gross margin. You mentioned that you are increasing prices slowly and that you will go back to the margins of 2020. What can you tell us about the VSO as you readjust prices? Is it a big impact due to lower competition since the whole industry is suffering with price increases, so I imagine that competition must have dropped. How are you seeing this? Will you give priority to gross margin instead of VSO, even with a more significant impact? The second question is on construction costs. It is difficult to foresee. Do you have a forecast for prices of raw materials for the second semester? Especially steel, do you expect higher prices in the short term, especially steel?
Elvis, good afternoon. Rodrigo Von. Let me talk about cost. Last year, we had a problem in the supply chain. The costs went up above the inflation levels for many months, above the INCC index. What we have seen is that these costs are stabilizing on the level of INCC. The INCC index is reflecting the cost increases. I saw here that you want to know about labor and materials. Let us talk about materials first. What we see through our contacts is that there will be some small price increases. A few margins will have their prices raised. We are analyzing this now. Labor, in spite of being fixed because of the union agreement, what we notice is that with the number of launches, number of projects in execution, we begin to understand that the best employees are leaving their jobs.
They leave a construction company, they go to another. There is a small movement. It began now, but in our vision, this will stabilize quickly. In the future, we do not know. The INCC index is what we have in for Plano & Plano. We have a grouping of construction companies that are very loyal amongst themselves, and they are with us in this journey. What does this mean? It means that they are leaving. Vendors, for example, are selling to us. I can say that our projects will not suffer any impact. We will finish them on time. We have good suppliers.
Elvis, good afternoon. João Hopp. Concerning VSO, what we have seen in the performance of the last few months, our launches are having a better performance than last year. We were very good in launches in the second semester, but the sales structure was not adequate. Because of this, we reacted, and we restructured the sales team. The launches are coming with a better VSO, and the performance is better than last year. Looking forward, the balance between VSO and margin, the search is for both. We are making an effort on both. We are really working on this with management. We do a follow-up of margins every month, looking at the costs of the projects, and we analyze how much time we need for deliveries, and we try to have a balance of VSO with better margins.
We are not privileging neither one nor the other. We are working on both, and we have continuous management to deliver both.
Thank you.
[Non-English content ] Our next question comes from Renan Manda, XP Investments.
Good afternoon. The margin for medium, low income and low income projects. During the project, what is the strategy in the new launches? Will you begin with a compressed margin to leverage VSO during the curve of sales, increasing the price list? Or are you launching in the beginning with a more robust profit?
Good afternoon, Renan. Thank you for the question. The strategy of the company is to launch projects that are aligned with our levels of profitability. If we see that we have projects that are misaligned in terms of a solid return to the company, it will be rethought and launched later on with a new reality. When we launch products for medium and low income, we are always working to maintain healthy margins for the company and even above our competition, different from what happened in Q2.
Our next question comes from the webcast, [Luiz Coltana], Investor.
The new commercial strategy, apart from qualitative gains, do you expect expenses below the previous model? The IFRS margin should be compared with a gross margin, adjusted margin. The increase is due to expectations involving higher prices. Can we expect an upside?
Thank you for the question. The sales strategy with the teams we have, some are fixed and some are variable. We do a follow-up of them. In terms of fixed, they become more diluted, these expenses become more diluted as the company grows. So the weight of the sales area should decrease when we have more sales. It depends on the period too. If we increase the commission of the salespeople for an important launch, variable expenses, they are commissions, they do not change. But the fixed structure that we put together will be diluted in the next few periods. We will see this in the next two years. In terms of the margin, it considers all the increase of the costs of the construction and also prices.
So in terms of those units sold, they are fixed. Now, so our expectation is that we be able to recognize this revenue reflecting the costs in the next quarters that we recognize. So this margin will go to the levels that we announced. An increase could come in new sales and as we increase prices, because inflation is putting pressure on us, but we increase prices gradually. And the new sales levels will come in the next quarters.
Thank you.
[Non-English content ] Our next question comes from the webcast, Bruno Mendonça, Bradesco BBI.
You talked about gross margin going back to 2020 levels. Do you understand that this recovery will happen only with price increases of the units, or will you be able to reduce the cost of materials? How is labor seen in this?
Well, thank you for the question. The gross margin, we will work for it to go back quickly to the ones we had in 2020 due to price adjustments and also changes in products. We already have a great history of quality in our projects. We are different from the competition. We are very careful in our projects, and right now, without lowering the quality, but simplifying the projects, we are able to decrease costs. So there are some actions mapped that we will implement in new projects. So as we have a lower cost per square meter, this will help us improve profitability. So it is price and also adjustments. And now you asked about labor. I understand that in our case, the costs of labor this year, we have 7.5% increase in labor cost due to union increases.
So in the next 12 months, next year, we believe we will have a stability in the cost of labor.
Our next question also comes from the webcast, [Rodrigo Deniz Mendes], Eleven Financial Research.
Good afternoon. Please comment more on your forecasts for margins due to price increases in raw materials?
[Rodrigo], thank you. This is a very important topic, yes. Before talking about forecasts, we have a dynamics that is different in supplies in relation to two years ago. Supplies, we are working with partners. For example, concentrating purchases and one supplier to have better prices, guaranteeing delivery prices. For example, floor tiles. As the project begins, we already buy the floor tiles and wall tiles, and this work guarantees that we will deliver our projects on time. Looking forward, we have some perspectives. We will have some price increases still. We see the INCC index year to date 17.35%, and in July it was 16.9%. We are beginning to see a stability that we believe the worst has already happened, and we are working to mitigate this with advance purchases. The gross margin, once again, we see a trend.
We believe in this trend that there will be a gradual recovery during the next quarters.
[Non-English content] Our next question comes from the webcast from Carlos Herrera, Condor Insider.
Good afternoon. Do you imagine the possibility of delaying launches because of cost increases?
Hello, Carlos. Thank you for the question. In line with what we already said, our objective is to launch products that are aligned with the profitability established by the company. If we notice that there is a product that is not aligned with our forecast and our objectives, we do not launch it. We want volume, we want growth, but above all, we want quality and profitability. We are a company that has double-digit growth every year, delivering good results for the shareholders.
[Non-English content] Reminding you to ask questions, please dial asterisk one. João Hopp, once again. Do we have more questions? We would like to conclude the Q&A session. I would like to pass the floor to Mr. Rodrigo Luna, Vice President, for his final comments. Mr. Rodrigo, you may proceed.
Once again, good afternoon. Thank you for participating in our conference call. A final message. We continue believing and trusting a lot in the year of 2021 in terms of results. In spite of seeing some pressure in our profitability, the operation of Plano & Plano has a lot of focus. We believe we will have a second semester that will be very strong due to the end of the pandemic, the reestablishment of social relations, and we still have a giant demand. There is a deficit in housing in Brazil, and we see a drop in the competition due to the new conditions in the market. Because of this, we believe a lot that our operation is adequate. We are making the necessary changes, and soon we will deliver more robust margins, always focused on growth and quality of our projects.
Thank you very much for your presence, and we will meet again.