KB Posts Big Drop in Profit

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KB Home reported a huge plunge in first quarter profit and a grim outlook for 2007 on Thursday, but shares barely budged as the figures exceeded Wall Street expectations.


KB reported first quarter net income of $27.5 million (34 cents per share), an 84 percent fall from $173 million ($2.01) for the same period a year earlier. Analysts’ expected net income of 25 cents per share, according to a poll conducted by Thomson Financial.


Revenue for the Los Angeles-based homebuilder dropped 19 percent to $1.8 billion mainly due to a 16 percent drop in deliveries and a 5 percent slide in the average selling price. However, this also beat Wall Street’s expectations of $1.6 billion in sales.


Home orders for the quarter were down 12 percent to 7,677 with a cancellation of 31 percent, a solid improvement from the 48 percent cancellation rate KB reported in the previous quarter.


“We believe these conditions will likely continue for at least the remainder of 2007, reducing our quarterly and full-year revenues and earnings compared to 2006 results,” said Jeffrey Mezger, KB’s president and chief executive, in a statement.


Shares in KB Home were down 6 cents to $47.69 in afternoon trading Thursday on the New York Stock Exchange.