Lennar Cuts Profit Outlook,
Reports 39% Decline in Net
From The Wall Street Journal Online
Lennar Corp., one of the nation's top homebuilders, said Tuesday its third-quarter profit dropped 39% due to a continued slowdown in the housing market. Lennar also lowered guidance for the fourth quarter as it limits its land purchases and works to lower inventory.The Miami company's net income fell to $206.7 million, or $1.30 per share, from $337.3 million, or $2.06 per share, in the year-ago period. Quarterly revenue climbed 20% to $4.18 billion from $3.5 billion, as home deliveries rose in every region, and the average sale price of homes delivered also increased. However, new home orders were down slightly from a year ago.
The company reported a 39% decrease in earnings from continuing operations and a 31% rise in costs of homes sold, land sold and general and administrative expenses compared to last year.
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Lennar Is Latest Builder to Fret |
Analysts polled by Thomson Financial were looking for third-quarter earnings of $1.28 a share on sales of $3.72 billion. Third-quarter results were within the company's previously announced revised goal of $1.25 to $1.35 a share.
"The U.S. housing market has continued to deteriorate, trailing down further and faster than anticipated," Lennar President and Chief Executive Stuart Miller said in a statement. "We have limited our land purchases and reduced standing inventory through strategic asset management. Additionally, we have emphasized salesmanship and simplicity in the field which help control costs in the management of our business."
Gross margins on home sales totaled $729.2 million, or 18.7%, down sharply from $846.4 million, or 26.3%, last year. The company cited decreases in all of its homebuilding segments, primarily due to higher sales incentives offered to homebuyers and $32 million of inventory valuation adjustments.
Lennar also cut fourth-quarter earnings guidance to a range of $1 to $1.30 per share due to current market conditions. Analysts currently forecast much higher quarterly earnings of $1.60 per share for the fourth quarter. Earlier this month, Lennar joined the chorus of profit warnings coming from the home builders when it lowered its third-quarter outlook.
"Although the economy remains strong and unemployment and interest rates remain relatively low, it is not clear that the homebuilding downturn has yet found a floor," said Mr. Miller.
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