Lennar 1Q net income rises 34 percent
MIAMI – Lennar Corp. said Tuesday its first-quarter profit grew 34 percent, topping Wall Street expectations, and the company reaffirmed its financial target for the year despite a recent downturn in new home sales.For the fiscal first quarter ended Feb. 28, net income grew to $258.1 million, or $1.58 per share, from $193.2 million, or $1.17 per share, in the previous first quarter.Revenue rose 35 percent to $3.24 billion from $2.41 billion, reflecting strength in Lennar’s homebuilding and land divisions.Analysts surveyed by Thomson Financial forecast, on average, a quarterly profit of $1.55 per share on revenue of $3.07 billion.Lennar’s success stands in contrast to a national decline in new home sales. The Commerce Department reported Friday that sales of new single-family homes dropped by 10.5 percent in February to a seasonally adjusted annual sales pace of 1.08 million homes. It was the second straight monthly decline, following a 5.3 percent fall in January, and marked the biggest one-month drop since April 1997.Stuart Miller, Lennar’s president and chief executive, acknowledged a slowdown in the sales pace in some major markets and a moderation in price appreciation compared to the past few years. But he referred to it more as a cooling period or soft correction in the market than the bursting of the “housing bubble.””Even the currently cooling housing conditions will give us an opportunity to perform well into 2007,” Miller said in a conference call. “We’ve already seen some recovery in the traffic patterns in our major markets.”The company was dealing with market changes by employing a combination of sales incentives, price reductions and price maintenance in local markets, Miller said. He added that other signs such as continually low interest rates and a strong economy would help the market.The company, which said new orders rose 4 percent to 9,793 homes, said its backlog rose 18 percent to $7.1 billion, leading it to reaffirm its 2006 earnings-per-share target of $9.25.The 15 analysts surveyed by Thomson Financial expect Lennar to earn $9.30 per share for the year.Revenues were higher primarily due to an 18 percent increase in the number of home deliveries and a 12 percent increase in the average sales price of delivered homes, the company reported. The average selling price of homes delivered increased to $326,000 in the first quarter of 2006 from $292,000 in 2005.Among Lennar’s stronger markets in the quarter were Florida, the Carolinas and New Jersey, while some sections of the West, such as the Tucson, Ariz., area, saw a fall in new orders, the company said.Lennar shares rose 76 cents, or 1.3 percent, to $61.08 in afternoon trading on the New York Stock Exchange.
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