KB Home loses $68.5 million in second quarter
Los Angeles home builder KB Home’s loss widened in its second quarter as the housing market stalled and the company continued to suffer the fallout from the bankruptcy of a Las Vegas development.
The company posted a net loss of $68.5 million, or 89 cents a share, for the three months that ended May 31. That compared with a net loss of $30.7 million, or 40 cents a share, a year earlier.
“Although a broad-based housing recovery remains stalled, it appears that the worst of the crisis is behind the home-building industry as select markets for new homes are showing signs of stability,” KB Home Chief Executive Jeffrey Mezger said. “Uncertainty and caution about the economy are keeping many qualified home buyers from entering the market, even though historically high housing affordability makes this a good time to buy.”
The loss was bigger than Wall Street analysts had projected, with various surveys coming in at 31 to 33 cents a share. KB Home fell $1.84 or 15%, to $10.08.
KB Home revenue was $271.7 million, down 27% from $374.1 million a year earlier.
Home builders are facing severe pressure in 2011. Investors rich with cash and other buyers have increased their market presence in recent months, mostly snapping up foreclosures and short sales and eschewing new homes.
Demand from those who buy a home to live in has slackened since the expiration of tax credits last year. KB Home and other builders have been trying to lure potential home shoppers away from the resale market and into their new properties by offering smaller, more affordable models and rolling out more modern, energy-efficient designs.
The company’s second-quarter loss included charges for inventory impairments and land option contract abandonments of $20.6 million.
The company also was hit with a loss on a loan guaranty of $14.6 million related to the South Edge residential development in Las Vegas, which is now in bankruptcy. South Edge, of which KB Home is a partial owner, is the developer of a massive planned Las Vegas community called Inspirada.
Mezger said he expected improvement in the rest of 2011 that will “drive stronger bottom-line results compared to the first two quarters of the year.”
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