Archive for Saturday, June 28, 2008
KB Home’s second-quarter losses are worse than expected
The L.A. homebuilder says it is suffering from declining prices and widespread foreclosures in California, Nevada, Arizona and Florida.
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.
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