KB Home’s Earnings Climb 65%
KB Home, the third-largest U.S. home builder by homes sold, said earnings jumped 65% in its fiscal first-quarter, helped by low mortgage rates and mild weather, and it expects 2002 profit to exceed estimates.
Net income for the period ended Feb. 28 was $42.7 million, or 95 cents a share, up from $25.8 million, or 70 cents, a year earlier, as revenue increased 12% to $915.7million.
KB Home, which changed its name from Kaufman & Broad Corp. last year, was expected to earn 79 cents a share for the quarter, according to a poll by Thomson Financial/First Call.
Los Angeles-based KB’s home sales rose 10% in the quarter, to 5,081, including 734 homes in France, where its Kaufman & Broad unit is one of the largest builders. The average price of a home rose 2% to $177,900.
Traffic at the company’s sales offices increased 7.4%, the company said.
Orders for homes in the U.S. dropped 1% to 5,627 in the quarter, excluding joint ventures, while orders in France surged 23% to 814, the company said. In the U.S., KB builds in California, Arizona, Nevada, New Mexico, Colorado, Texas and Florida.
The backlog of homes ordered in the U.S. but not yet delivered rose to 10,451 from 10,447 at an average price of $190,808, 6% higher than a year earlier. In France, the backlog rose 8.5% to 2,092, and the average price dropped 9% to $140,428.
Chief Executive Bruce Karatz told investors that the company will earn $6.10 a share to $6.25 a share in fiscal 2002, compared with its earlier forecast of $5.75 to $6.10. Analysts were expecting earnings of $5.68 for the year.
U.S. home builders have been helped by mortgage rates near 30-year lows and the fifth-warmest winter in more than a century. Declining unemployment and other signs the economy is expanding have more economists saying the Federal Reserve may start raising interest rates, making it more expensive to buy a home.
The Standard & Poor’s supercomposite home building index has fallen 11% from a peak on March 6, as investors anticipate higher rates.
KB Home shares fell 95 cents to $40.50 on the New York Stock Exchange.
