Earnings Soar for No. 2 U.S. Home Builder
Kaufman & Broad Home Corp., the second-largest U.S. home builder, said Tuesday that fiscal second-quarter earnings rose 66% as a booming housing market and acquisitions helped boost sales and allowed it to raise prices.
The Los Angeles-based company’s net income for the three months ended May 31 rose to a record $28.6 million, or 58 cents a share, from $17.2 million, or 42 cents, in the year-earlier period. The figures include the results of Lewis Homes, formerly the biggest privately held U.S. home builder, which Kaufman & Broad purchased for $593 million in January.
The results beat the 55-cents-a-share average forecast of analysts polled by First Call Corp.
The company attributed the better-than-expected earnings to a 51% increase in homes built to 5,139 units and an increase in its operating profit margin to 5.6% from 5.2%.
With housing sales on track for another record year, Kaufman & Broad said it was able to increase the average selling price of a home in California, its main market, by 11% to $242,400.
“Net orders are strong across the board, and we see no evidence of adverse effects from the recent increase in interest rates,” Bruce Karatz, the company’s chairman and chief executive, said in a statement.
Kaufman & Broad shares were unchanged at $23.50 on the New York Stock Exchange. Year to date, the shares are down 18.3% on speculation that the housing market is so good, it has nowhere to go but down.
The company said revenue in the quarter rose 60% to $862.3 million, from $537.5 million. The company operates in 20 markets, including California, Nevada, Arizona, Texas and Utah. It is also one of the biggest home builders in France.
At a Glance
* Countrywide Credit Industries Inc., a residential mortgage lender based in Calabasas, posted stronger profit for its fiscal first quarter as the company rode the U.S. housing boom.
Earnings for the quarter ended May 31 rose to $103.4 million, or 88 cents a share, from $90.8 million, or 78 cents, in the same quarter last year. Although that matched estimates as measured by a First Call Corp. survey, analysts said rising interest rates may cause fewer consumers to refinance their mortgages, forcing lenders to lower fees.
Thirty-year-old Countrywide, which makes new loans and collects payments on existing loans, said it lent $23.2 billion in the quarter, up 11% from the year-earlier quarter. The number of new loans rose 11% to 203,786.
