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KB Home's Quarterly Profit Surges 40%

The home builder cites record-high revenue as it benefited from higher real estate prices, especially in California.

January 17, 2003|Jesus Sanchez | Times Staff Writer

KB Home Corp., one of the nation's largest home builders, said Thursday that its fiscal fourth-quarter profit jumped 40% on record-high revenue as the Los Angeles-based firm benefited from higher real estate prices -- particularly in California -- and one of the industry's best years ever.

Although demand for new housing is expected to cool down this year, KB Home's chairman and chief executive, Bruce Karatz, said his firm plans on opening about 100 projects nationwide in the next few months and anticipates double-digit growth in earnings and revenue in the new year.

Low mortgage rates, population growth in the company's key markets and other factors "will drive new-home sales for the foreseeable future," Karatz said.

However, the price increases reported in the fourth quarter are not expected to continue, Karatz said, so the company is looking at squeezing more dwellings, at lower prices, into its projects.

KB's quarterly and annual results beat analysts' expectations, sending its shares surging 5.7% to close Thursday at $46.62 on the New York Stock Exchange.

Although KB's results for last year were strong nationwide, Karatz said the builder sold fewer homes in Texas than it did in fiscal 2001 and also experienced softness in Colorado. But sales and demand remained strong in Arizona, Nevada and particularly California.

In its West Coast region, which is composed mainly of California, KB's home orders for fiscal 2002 surged more than 40% to 6,081.

Its average sale price in the West Coast rose 12% during the year to $318,300 and was about 18% higher during the fourth quarter, on a year-over-year basis.

For the three-month period ended Nov. 30, KB posted net income of $123.7 million, or $2.92 a share, up from $88.5 million, or $2.03 a share, a year earlier. Quarterly revenue increased 16% from the year-ago period to $1.68 billion.

For the full fiscal year, net income jumped 47% to an all-time high of $314.4 million, or $7.15 a share. Revenue for the year rose 10% to $5.03 billion.

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