Lennar Swings to $514 million Loss

123jump.com Staff
25 Sep, 2007
New York City

Lennar, Miami based home builder, reported third quarter loss of $3.25 per share or $513.9 million on 44% decline in revenue. The company sold 41% fewer homes at 6.3% lower prices. Lennar reported a string losses beginning in the fiscal fourth quarter of 2006. In the fourth qaurter the company reported a loss of $1.24 per share and in the second quarter of fiscal 2007 a loss of $1.55. In the first quarter 2007 Lennar reported a profit of 43 cents.

[R]9:00AM New York – Lennar report $3.25 per share loss in the third quarter.[/R]

Lennar Corp. reported third quarter net loss of $513.9 million from $206.7 million a year ago or loss of $3.25 earnings per share compared to income of $1.30. The company recorded $344.7 million in write down related to land sales and losses of $127.4 million from subsidiaries.

Revenue in the quarter fell 44% $2.34 billion and sold 7,266 homes, 41% decline from a year ago at 6.3% lower home price of $296,000

Gross margin on home sales excluding valuation adjustments fell to 14% in the third quarter from 19.5% in 2006. Including the valuation adjustment the gross margin fell in the third quarter to 1.0 million from $729.2 million or 18.7% from a year ago.

Selling and general administrative expenses were reduced by $122.3 million or 29% in the quarter on reduction in staff and as a percentage of sales the margin increased to 14% from 10.9%. Operating loss in the financing subsidiary was $5.2 million compared to profit of $61.7 million a year ago.

Lennar ((LEN)) fell 5.5% in the pre-market trading. Lennar stock has fallen from a peak of $56.54 in February of this year and traded as high as $66.44 in January of 2006.

[R]6:00AM New York, 7:00PM Tokyo, Realty stocks lift Tokyo stocks higher. Bank of Japan to wait for global markets to stabilize before hiking interest rate.[/R]

Japan opened the week higher, climbing 0.55% or 89.12 to 16,401.73 buoyed by gains in realty stocks and electronic companies.

Of the Nikkei 225 stocks, 136 gained, 81 slipped and 8 traded unchanged. Realty concern Tokyu Land Corporation led the rise in the index shares. Automakers also rose. Nisshin Oillio led retreating stocks.

Minutes of last week’s Bank of Japan meeting released today show policymakers believe the economy will continue to grow in step with the twice-yearly outlook made in April this year. The bank also revealed that it will keep interest rates on hold at 0.5% until global credit markets return to normal.

While the benchmark interest rate was kept low by 8 to1 vote, Governor of the Bank of Japan Toshihiko Fukui said last week keeping borrowing costs low may encourage risky investments. Authorities are struggling to stave off a decade-old deflation.

Japan’s GDP declined by an annualized 1.2% in the second quarter and consumer prices, a measure of inflation, slid 0.1% in July as consumer prices grew by half the pace of the first quarter, a government survey showed recently. The board will meet again on October 31.

Yen rose against the dollar and it traded as high as 114.55 in Tokyo at close. Yen has advanced 1% against Aussie dollar to 98.65 and 2.1% to 84.12 against New Zealand dollar. The dollar is likely to come under renewed pressure after the release of home sales statistics this morning in New York.

Hino Motors Ltd. Revised its sales forecast ending the six months at the end of September by 9% to 665 billion yen and net income by 17% to 11 billion yen. The company expects the international unit sales to increase by 12%.

However, realty stocks continue to gain after the Ministry of Land, Infrastructure and Transport reported Japan’s commercial land prices rose 1% overall, the first increase since 1991, while residential land price increase narrowed to 0.7% from 2.3%.

The strike at U.S. automaker General Motors, which threatens to spread to Mexico and Canada, also spurred Japanese automakers whose niche market is in North America. Toyota generated 70% of its operating profit in North America last year, while Honda generated 55% of its sales in the region.

Industry analysts believe that the nationwide strike may cost the company a loss of daily sales of 12,200 vehicles in the U.S. Buyers may turn to Japanese and European makers to meet their needs.

Toyota firmed for the first time in 3 days to 1.22%, while Honda edged up 1.6%.

Of the index shares, Tokyu Land Corporation climbed 8.32%, NGK Insulators gained 5.93%, Tokyo Dome Corporation soared 5.84%. Fuji Electric added 5.71% and Mitsui Engineering and Ship Building edged up 5.33% on news the Baltic Dry Index, the benchmark for bulk shipping fees, had increased to a record. Other ship companies gained as well with Kawasaki Kisen and Mitsui O.S.K. soaring 4.95% and 4.60 respectively.


Leading the decliners in the index was Nisshin Oillio shedding 5.66%, Mitsubishi UFJ Nicos lost 5.31%, Topy Industrials Limited declined 5.20% and Trend Micro Corp slipped 4.98%. Adventest Corporation fell 4.7% after reports that the world’s biggest supplier of memory chip tester’s operating profit may fall 1% to 56 billion yen.