Capital Pacific’s 2nd-Quarter Profit Declines

Home builder Capital Pacific Holdings Inc. reported a 33% decrease in second-quarter profit, blaming higher income tax provisions for the decline.

For the quarter ended Aug. 31, the parent of J.M. Peters Co. earned $1.4 million, or 10 cents per share, compared with $2.1 million, or 14 cents per share, during the same period a year earlier.

The year-ago results were inflated by a tax refund from the government. Pretax earnings actually rose slightly year-to-year, from $2 million to $2.1 million, said Marc Cummings, Capital Pacific’s finance chief.

Revenues fell 28% to $46.1 million from $64.3 million. The company said its limited bank credit had held back construction.

Capital Pacific this month sold a stake in its business to private investors in a deal that will give it $30 million in expansion capital.

It also said it will concentrate on high-priced homes such as the $1-million houses at its Mulholland Park development above the San Fernando Valley. The high-end housing market has been hot lately in Southern California and has the potential for greater profit margins than lower-priced homes.

For the first six months, Capital Pacific earned $2.5 million, or 17 cents per share, up from $2.4 million, or 16 cents per share, a year ago. Sales fell to $80.1 million $110.5 million a year earlier.