Toll Bros Earnings Decline 19%

123jump.com Staff
22 Aug, 2006
New York City

Market averages are expected to open lower. Toll Brothers reported third quarter earnings per share of $1.07 vs. $1.27 on revenue decline of 1%. The company also reduced the number of lots it controls by 10% and lowered its earnings guidance for the year. Oil prices in European trading were near unchaged as traders awaited formal response from Iran.

[R]9:15AM Toll Brothers report Q3 profit decline of 19%.[/R]
The luxury home builder, Toll Bros. ((TOL)) reported third quarter earnings of $1.07 compared to $1.27 a year ago. The company reported in the quarter revenue of $1.53 billion vs. $1.55 billion a year ago and earnings of $174.6 million compared to $215.5 million a year ago.

In the fourth quarter ending October 2006, the company expects to deliver between 2,500 and 2,800 homes at an average price of between $695,000 and $705,000.

Chairman and Chief Executive Officer, Robert I. Toll also said that the continuing malaise in the housing market is the result of an oversupply of inventory and a decline in confidence. The speculative buyers of 2004 and 2005 are now sellers; builders that built speculative homes are trying to move them by offering large incentives and discounts; and some anxious buyers are canceling contracts for homes already being built. This overhang in supply and the aggressive discounting of many builders is undermining consumer confidence and keeping buyers on the sidelines as they continue to worry about the direction of home prices.

The company also noted in the press release that it has lowered its position of lots it controls through options and direct ownership. At the end of the third quarter the number of lots controlled by the company decreased to 82,900 from 91,200 at the end of the second quarter.

The Company revised its earnings guidance for fiscal 2006 to between $4.41 and $4.63 per share, compared to its previous guidance of between $4.69 and $5.16 per share.

[R]7:30 Japanese benchmark index leads regional indexes higher.[/R]
Asian markets finished higher on Tuesday. The Nikkei 225 Average in Japan finished 1.3% higher at 16,181.17. Honda advanced 2.3%, while Nikon gained 2.2%, reversing declines on Monday. Star Micronics surged 4.8% after the company lifted its earnings forecast for the year to February on Monday. Shares of Nippon Oil advanced 3.7% in the wake of reports that the company will begin selling hydrogen-powered fuel cells to residential customers as early as next year. Japanese financial stocks were also higher, led by Nomura Holdings, which gained 3%. Nikko Cordial added 1.9%, and Daiwa Securities Group gained 3.2%.

Hong Kong''s Hang Seng Index ended up 0.83% at 17,149.75. Energy stocks led the gainers. PetroChina moved up 3.2% on hopes of strong first-half earnings. Other Chinese oil-related companies also gained. Cnooc gained 2.7%, Sinopec increased 1.3% and China Oilfield Service surged 8.8%.

In South Korea, shares ended higher on solid program buying, helped by foreign futures purchases. Brokerage shares gained on expectations of rising commissions following the Kospi's rise above 1330. Daewoo Securities advanced 3.9% and Hyundai Securities surged 4.6%. Telecom shares spurted on attractive valuations after the sector lost ground in late July and early August, hit by worries over higher marketing costs.

Other indexes around the region also gained, shares in Taiwan advanced 1.3%, Shanghai's Composite Index rose 0.8%. In China, stocks were led by mining companies after metal prices soared Monday in the international market. Shandong Gold-Mining soared 5.1%, Zhongjin Gold advanced 2.9%, Jiangxi Copper spurted 5%, and Yunnan Copper added 4.9%. Australia's S&P ASX/200 advanced 0.3% to 5076.2, boosted by gains in resource-related shares.

[R]6:30AM European markets move up slightly on gains in construction stocks.[/R]
European markets were slightly higher by mid-morning on Tuesday. The U.K. FTSE 100 gained 0.2% at 5,924, the German DAX 30 index edged up 0.3% at 5,810 and the French CAC 40 index advanced 0.4% to 5,122. French building materials company Lafarge advanced 1.3% following a report from the French newspaper La Tribune that its roofing business has been the focus of at least 12 investment funds, as well as the Austrian company Wienerberger.

Swiss holding company Investor gained 2.2% in the wake of its agreement to tender its shares in WM-Data, the IT consultancy group, to Anglo-Dutch group LogicaCMG, which said on Monday it was buying WM-Data. Acciona, the Spanish builder, climbed 1.3% after it reported following the close on Monday, a forecast-beating 38% rise in first-half net profit. French heavy engineering group, Alstom, surged 3.8% after its statement that it had won a lucrative contract to build a coal-fired electricity generating plant in the US.

Oil prices moved slightly Tuesday ahead of Iran's formal response to a U.N. plan meant to encourage the country to suspend uranium enrichment, although Tehran has already indicated it will not do so. Light sweet crude for September delivery fell 9 cents to $72.36 a barrel. Gold traded higher on Tuesday at $627.50 an ounce, up $5.90 an ounce from Monday's close of $621.60.

The euro moved slightly down against the U.S. dollar Tuesday after reaching its highest level since June the previous day. The euro bought $1.2881 in early European trading, down from $1.2892 in New York late Monday. The British pound edged up to $1.8938 from $1.8934. The dollar rose to 116.04 Japanese yen from 115.80 yen.

[R]5:00AM Gold and copper rally amid tensions and criticism.[/R]
December gold moved up $13.50 to close at $635.20 a troy ounce on Monday, while September silver advanced 31 cents to end at $12.35 an ounce. October platinum added $18.50 to close at $1,242.10 an ounce, while September palladium gained $10.90 to finish at $345.20 an ounce. The September copper contract rose 8.50 cents to settle at $3.5195 per pound on the NYME.

The front-month September light, sweet crude oil contract settled up $1.31 to $72.45 a barrel. September gasoline shed 3.03 cents to $1.9360 a gallon and September heating oil rose 4.32 cents to $2.035 a gallon. September natural gas ended down 10.7 cents at $6.624 a million British thermal units. September Arabica coffee finished 3.75 cents higher at $1.07 a pound and December gained 3.80 cents to $1.1095. Futures on raw sugar in foreign ports for October settled down 0.04 cent at 12.14 cents a pound while March sank 0.02 cent to 12.82 cents.