KB Home’s second-quarter losses are worse than expected

By

Peter Y. HongTimes Staff Writer

Los Angeles homebuilder KB Home reported a second-quarter loss Friday of $256 million, or $3.30 per share, nearly three times the average prediction by analysts.

The average loss estimate by analysts surveyed by Bloomberg was $1 per share for the quarter ended May 31, 2008.

KB Home Chief Executive Jeffrey Mezger said in a conference call with analysts that the builder’s large presence in California, Nevada, Arizona and Florida – where home values have plummeted and foreclosures are widespread – hurt its performance.

Mezger said he did not expect home prices to recover anytime soon.

“The only way to improve our margin is [to cut] costs,” he said.

Mezger said the company is cutting its building costs and offering more modest entry-level homes. He said sales prices of KB Home were down 7% in the last quarter and have fallen an additional 8% to 9% this quarter.

The company’s $256 million second-quarter loss compares with a $148.7 million, or $1.93 per share, loss for the same quarter a year ago.

Its second-quarter revenues of $639 million were down compared with its $1.41 billion in revenue for the same quarter a year ago.

Mezger said the company continues to trim its costs and overhead, to better position itself for rising demand for housing after 2010.

 peter.hong@latimes.com