KB Home Profit Surges 78 Percent

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KB Home on Thursday said its second-quarter profit surged 78 percent, boosted by higher sales and improved margins in its homebuilding business. The L.A.-based homebuilder also raised its earnings guidance for the rest of the fiscal year.


KB Home reported net income of $181.5 million ($2.06 per diluted share) for the second quarter ended May 31, compared with $102.1 million ($1.20) for the like period a year earlier. Revenue rose to $2.1 billion from $1.6 billion in the year-ago period.


Analysts on average had expected the company to post earnings of $1.78 a share on revenues of $2.2 billion.


Company-wide revenues increased 36 percent from the year-ago period, reflecting demand and higher prices for new homes. Home-building revenues rose 37 percent from the comparable period of 2004 as deliveries rose 20 percent to 8,535 homes and average home prices rose 14 percent to $247,800. Prices rose the most on the West Coast, to $450,100 from $399,500, and in the Southwest, to $258,400 from $200,800 in the year-ago period.


KB Home’s construction operating margin improved by 3.2 percentage points in the second quarter to 13.9 percent.


“Housing demand in our major markets during the second quarter continued to outstrip supply, producing the highest number of net new orders for any single quarterly period in our company’s history,” said Bruce Karatz, chairman and chief executive, in a statement.


The company raised its earnings guidance for the full year to $9 per diluted share, a 14 percent increase over a previous estimate and a 58 percent increase over its 2004 earnings per share of $5.70.

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