Builder PulteGroup's 1Q Loss Widens On Fewer Closings

Date : 04/28/2011 @ 7:00AM
Source : Dow Jones News
Stock : Pultegrp., Inc. (PHM)
Quote : 22.7  0.5 (2.25%) @ 5:42PM

Builder PulteGroup's 1Q Loss Widens On Fewer Closings

Pulte Homes (NYSE:PHM)
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Builder PulteGroup Inc.'s (PHM) first-quarter loss widened as the builder's total revenues tumbled by 21%, dragged by fewer closings and lower selling prices.

The results continue what has been a rough earning season for home builders, including KB Home (KBH) and the Ryland Group Inc. (RYL, that continue limping through the worst housing crash in decades.

Consumers, wary of home prices falling further, remain hesitant to buy homes. More would-be buyers, meanwhile, are having trouble meeting tightened lending requirements for a mortgage. Builders can't compete with bargain-priced foreclosures. Dozens of private players have gone out of business and no relief is in sight.

"We expect the industry will continue to face low levels of demand and that overall operating conditions will remain highly competitive," Chief Executive Richard J. Dugas said in the re-market release. But Bloomfield Hills, Mich.-based Pulte faces more complicated issues. The builder, the nation's second-largest builder by annual closings, continues trying to justify its 2009 acquisition of competitor Centex Corp.

When it announced the deal, Pulte touted the benefit of cutting overhead costs, entering new markets--including Seattle and Portland--and returning to profitability more quickly. But the housing market has weakened further since the surprise deal, weighing on Pulte's performance and causing some industry watchers to criticize the transaction.

Pulte labeled the most recent quarter's consumer traffic encouraging and said that orders--which spiked 43% from the fourth quarter--and margins exceeded internal forecasts. Should such improvement continue, the company could be profitable "in the back half of 2011," the company said.

For the quarter ended March 31, Pulte reported a loss of $40 million, or 10 cents per share, compared with a loss of $12 million, or 3 cents per share, a year earlier. The most-recent quarter included a modest $700,000 in land-related charges. Revenues dropped 21% to $805 million.

Analysts polled by Thomson Reuters had most recently forecast a loss of 13 cents on $814 million in revenue.

The results show that Pulte's loss was much more than analysts had expected and land-related charges aren't one of those reasons.

-By Dawn Wotapka; Dow Jones Newswires; 212-416-2193; dawn.wotapka@dowjones.com

 
 



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