Unprofitalble Unit Blamed for Covington Technologies’ Loss

Covington Technologies reported a $3.6-million loss for the 1984 calendar year, a dramatic slide from the $427,000 profit earned the prior year. The company attributed much of the loss to the failure of its attempt to diversify into government contract building.

Revenues for the year were $51.7 million, about 16% higher than the $44.5 million recorded in 1983.

About $2 million of the loss, the Fullerton builder of lower-priced homes and apartments said, came from its contracting division, which will be phased out over the next two years. Established in 1982 as a buffer for the cyclical real estate construction industry, the division handled construction projects on military bases.

Although the division turned a profit in its first two years, the loss last year forced reevaluation of the operation, explained Deyo Breen, chief financial officer. “It was a flop,” Breen said. “Our basic industry is real estate. That’s where we feel most comfortable and that’s where we’ll continue to concentrate.”

Robert B. Fitzpatrick, president of the company, said its residential development business generated a pretax profit of $3.2 million for the year.

Fitzpatrick also blamed the eroding property values on six parcels of land for the company’s decision write down their anticipated worth. The company has been trying to sell the properties, located throughout the state for several months, he said.

Breen said fourth-quarter results will not be released until the company completes the process of restate earnings for the first three quarters to reflect the winding down of the contracting operations and the decreased value of its land holdings.

In an unrelated announcement, the company reported Monday that the People’s Republic of China had purchased equipment to start a prefabricated home-building operation from its Covintec USA subsidiary. The value of the sale was not released.