Wednesday, 24 October 2007

Centex feels the pinch in 3rd quarter

From Bloomberg:

Centex Reports Loss as Housing Slump Intensifies

Centex Corp., the fourth-largest U.S. homebuilder, reported its biggest quarterly loss in at least 17 years after writing down the value of property as the housing recession intensified.

The net loss in the three months ended Sept. 30 was $643.8 million, or $5.26 a share, compared with net income of $137.4 million, or $1.11, a year earlier, Dallas-based Centex said today in a statement. Fiscal second-quarter revenue fell 21 percent to $2.2 billion. Centex recorded $983 million in land writedowns and charges and said its cancellation rate was 35 percent.

"Market conditions were extremely challenging during the quarter, reflecting the serious disruptions in the credit and mortgage markets that occurred during that period,'' Chief Executive Officer Tim Eller said in the statement. "In response, we meaningfully reduced prices in order to improve affordability for our home buyers.''

September home sales are forecast to fall to a seven-year low as lenders tighten credit standards and defaults doubled last month from a year ago. Homebuilders are cutting prices to clear inventories and contend with a more than eight-month supply of unsold homes, the most in at least six years.

Centex was projected to have a net loss of $5.52 a share, according to the average estimate of seven analysts in a Bloomberg survey.

"It's just more bad news I guess,'' said Alex Barron, an analyst who follows homebuilders for Wayzata, Minnesota-based Agency Trading Group Inc. "Things continue to deteriorate.''

Shares of Centex fell 93 cents, or 3.6 percent, to $24.64 in New York Stock Exchange composite trading today. The shares are down 56 percent this year, compared with a 51 percent drop in a Standard & Poor's index of 15 homebuilders....

The average sale price for a home sold in the quarter was $280,816, down 8 percent from $305,201 a year ago.

If there can be any positives taken out of this report it would be that Centex's inventory of unsold homes fell 38% whilst cancellation rates fell as well - although they are still high at 35%

There is plenty more housing related data coming out in the next few days with Existing home sales for Septemeber coming out on Wednesday and New homes sales on Thursday. On top of that more homebuilder earnings from Pulte Homes Inc., the third-largest U.S. builder, and Ryland Group Inc. are expected this week.