Toll Bros. net income decreases 67%

Toll Bros. Inc., the largest U.S. luxury home builder, said Thursday that its fiscal first-quarter profit fell 67% on expenses to write down the value of land after a year of plummeting home sales.

Net income for the three months that ended Jan. 31 declined to $54.3 million, or 33 cents a share, from $163.9 million, or 98 cents, a year earlier, Horsham, Pa.-based Toll said. The company had a $96.9-million land write-down in the period, less than earlier forecast.

Analysts surveyed by Bloomberg on average had expected earnings of 27 cents a share, excluding some items.

Revenue fell 19% to $1.09 billion. The average price of a Toll house was $676,139, down from $680,522 a year earlier.

Toll cut its profit forecast for the fiscal year and lowered its estimate for home deliveries in 2007 as orders slumped.

“There are too many soft markets at this stage of the selling season to call a general upturn in the new-home market,” Chief Executive Robert Toll said. In December he said the market was nearing a bottom.

“The high end of the market is still very weak,” said John Tomlinson, an analyst at Majestic Research in New York. “The land write-downs weren’t as drastic as they signaled they could be, but there’s a great deal of uncertainty about future write-downs.”

Shares of Toll fell 93 cents, or 2.8%, to $31.93.

Home builders including Lennar Corp., D.R. Horton Inc. and Ryland Group Inc. are struggling as inventories of unsold properties swell while buyers who expect prices to fall wait on the sidelines or cancel contracts.

Toll said 436 customers, or 30%, canceled contracts in the first quarter, down from 585, or 37%, in the previous three months. A year earlier, there were 151 cancellations.

Toll forecast earnings of $1.46 to $1.85 a share for fiscal 2007, less than an earlier estimate of $1.58 to $2.08.

The company said it would probably deliver 6,000 to 7,000 houses during the year, compared with an earlier forecast of 6,300 to 7,300 properties.

In addition to the land expenses, Toll took a charge of $9 million in the first quarter related to an acquisition in Detroit in 1999.

Excluding the write-downs and charges, Toll’s earnings fell 27% to 72 cents a share.