July 28 (Bloomberg) -- PulteGroup Inc., the largest U.S. homebuilder by revenue, reported a worse-than-expected second-quarter loss as sales fell amid slumping demand for new houses.
The net loss was $55 million, or 15 cents a share, compared with a profit of $76.3 million, or 20 cents, a year earlier, the Bloomfield Hills, Michigan-based company said today in a statement. The average estimate of 17 analysts in a Bloomberg survey was for a loss of 4 cents a share.
PulteGroup has been cutting expenses to remain competitive as the U.S. unemployment rate tops 9 percent and foreclosures mount, reducing prices for previously owned houses. Purchases of new homes declined 1 percent in June to a three-month low, the Commerce Department said July 26.
“I just don’t think Pulte can cost-cut its way to solid profitability,” Michael Widner, an analyst at Stifel Nicolaus & Co. in Baltimore with a “hold” rating on the stock, said before the report. “It’s too competitive a business and it’ll need some help from a housing recovery.”
The builder’s year-ago sales were bolstered by the rush to qualify for a federal tax incentive of as much as $8,000 that required buyers to sign contracts by April 30, 2010.
Return to Profitability
The company said it expects to be profitable in the second half of the year.
“In this operating environment, we are focused on reducing our construction and overhead costs and enhancing our product offerings,” Chief Executive Officer Richard Dugas said in the statement.
Net new orders rose to 4,222 homes in the second quarter, from 4,218 a year earlier. Revenue dropped 29 percent to $927 million.
The results were released before the start of regular U.S. trading. PulteGroup lost 6.9 percent this year through yesterday, matching the drop in the 12-member Standard & Poor’s Supercomposite Homebuilding Index.
D.R. Horton, the second-largest U.S. homebuilder by revenue, today reported a third-quarter profit that beat analysts’ estimates as the Fort Worth, Texas-based company cut costs.
(PulteGroup will hold a conference call today at 8:30 a.m. New York time. See LIVE <GO>.)
To contact the reporter on this story: Prashant Gopal in New York at Pgopal2@bloomberg.net.
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