KB Home reports loss, but stock price climbs

first_imgStill, KB Home’s construction business posted an operating loss of $96.4 million because of lower housing gross profit and a loss on land sales. The company’s revenue was driven primarily by a 5 percent jump in housing unit deliveries and a 4 percent rise in the average selling price. Housing unit deliveries totaled 12,553, compared with 11,946 in the year-ago period. The overall average selling price of the company’s homes during the quarter was $272,400, up from $262,700 in the fourth quarter of 2005. Net orders for homes declined 38 percent to 6,059 from 9,747 orders in the year-ago quarter. The rate of order cancellations during the quarter rose 48 percent, up from 31 percent in the same quarter in 2005. Still, the year-over-year decline in net orders and increase in cancellations were a modest improvement compared to the previous quarter, Wall Street analysts said. 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! For the quarter ended Nov. 30, KB Home posted a loss of $49.6 million, or 64 cents per share, versus a profit of $304.4 million, or $3.44 per share during the same period in 2005. The results included charges related to inventory and joint venture impairments, as well as the abandonment of land option contracts, that totaled $343.3 million. Revenue rose 13 percent to $3.55 billion from $3.15 billion. Analysts polled by Thomson Financial had expected a loss of $1.14 per share on revenue of $2.8 billion. During a conference call with Wall Street analysts, KB Home Chief Executive Jeffrey Mezger said the company managed a healthy profit margin, despite a “difficult quarter, where we faced a spike in cancellations and intense pressure on pricing.” KB Home reported a loss in its fourth quarter Tuesday as the homebuilder absorbed a series of charges related to inventory and land options and saw the number of net orders for homes decline sharply amid a tough housing market. But the company’s financial results exceeded Wall Street’s expectations, and its shares rose $1.49, or 2.9 percent, to close at $53.43 on the New York Stock Exchange. KB Home and other major home sellers have been scrambling to cope with the effects of a housing market downturn caused by an excess supply of new and resale homes on the market and high prices that have left many would-be buyers, particularly in major markets, hard pressed to buy a home. Many buyers looking to enter the market have been reluctant to do so, anticipating prices have further to fall, resulting in more competition and prompting homebuilders to lower prices and offer other sales incentives – moves that can erode sales margins. last_img read more