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Lennar Posts Lower Profit, Cuts Outlook

September 27, 2006|From the Associated Press

MIAMI — Lennar Corp., one of the nation's top home builders, reported a 39% slide in third-quarter profit Tuesday and lowered its outlook for the fourth quarter as the housing market continued to slow down. Revenue rose as the company worked to reduce inventory.

Net income fell to $206.7 million, or $1.30 a share, from $337.3 million, or $2.06, a year earlier, the company said.

Revenue rose 20% to $4.18 billion as home deliveries rose 17% and the average sale price of homes delivered increased 3%, Lennar said. New-home orders fell 5% from the same period a year earlier, a relatively modest drop considering the slowdown in the market overall.

Analysts polled by Thomson Financial were looking for third-quarter earnings of $1.28 a share on sales of $3.72 billion. Third-quarter results were within the company's previously announced revised goal of $1.25 to $1.35 a share.

Lennar shares, down 23% this year, rose 7 cents to $46.95.

Stuart Miller, chief executive of the Miami-based company, said Lennar was still using incentives and discounts to sell homes as cancellations in gross orders increased 30% from the year-earlier period.

Miller said the company was managing inventory and generating cash by delivering homes while also restricting land purchases.

The new-homes market has seen its share of problems this year. Housing construction plunged in August, falling to the lowest level in more than three years, the Commerce Department reported Sept. 19. Construction of new homes and apartments fell by 6%, and the annual rate for construction was down to 1.665 million units, the slowest pace since April 2003.

Lennar also cut fourth-quarter earnings guidance to a broad range of $1 to $1.30 a share because of current market conditions. Analysts had been forecasting $1.60 a share.

Miller said uncertainty in market factors such as changes in interest rates, inventory overhang and home pricing raised questions concerning short-term progress.

Two other large home builders, Beazer Homes USA Inc. and KB Home, cut their full-year financial forecasts this month.

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