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KB Home posts smaller 3Q loss
2009-09-25
LOS ANGELES - KB Home posted a smaller third-quarter loss on Friday as it reduced costs and said new home orders increased, offering fresh evidence that the housing market is hobbling toward recovery. Still, the results missed analysts' expectations. The company said it lost $66 million, or 87 cents a share, in the three months ended in August. That compares with a loss of $144.7 million, or $1.87 a share, the same period last year. KB Home said it improved its results by focusing on cost reduction, managing inventory levels and building smaller homes to compete with heavily discounted foreclosures. Revenue dropped 33 percent to $458.5 million from $681.6 million the year before due to fewer home sales and a decrease in the average sales price. The company sold 2,240 homes in the current quarter, a 20 percent decline from the year-ago period, while the average selling price fell 15 percent to $202,800. Analysts polled by Thomson Reuters were expecting a loss of 58 cents a share on revenue of about $457.9 million. But the results provided new signs that the housing market, while fragile, is on the mend. KB Home said its new home orders jumped 62 percent in the third quarter from the year before to 2,158, with every region posting year-over-year growth. Its cancellation rate dropped to 27 percent during the quarter, compared to 51 percent in the previous year. Low mortgage rates and a federal tax credit of up to $8,000 for first-time homebuyers have helped to fuel recent dealmaking. Nationally, new home sales have risen for four straight months, and August's new home sales are projected to be higher when official figures are released later Friday. KB Home remains cautious, however. Company President and CEO Jeff Mezger noted that increased foreclosures, higher unemployment, tighter credit requirements and weak consumer confidence could hamper a turnaround. "The housing market overall remains in a transition," Mezger said in a statement, "where it will likely be some time before we see meaningful improvement in the economic conditions that are essential to our industry's future growth." ___ On the Net: KB Home: http://www.kbhome.com
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