Major homebuilder sees 4Q improvement

Homebuilder Lennar Corp. posted a loss in its fiscal fourth quarter that was significantly smaller than last year’s record loss, but executives at the Miami company have yet to see signs that the troubled housing industry has bottomed. “Broad-based external pressures continued to negatively [affect] the housing market during the fourth quarter, as rising unemployment, falling home prices, increased foreclosures, tighter credit and volatile equity markets further eroded consumer confidence and depressed home sales,” Stuart Miller, president and chief executive of Lennar, said in a statement. However, he expressed cautious optimism about the incoming Obama administration. “We are hopeful the new administration will approve a major stimulus package to stimulate housing demand in order to stabilize housing values, which will reduce foreclosures and stabilize the financial markets, leading to restored consumer confidence.” The Miami company, which is the country’s second-largest builder, reported a loss of $811 million, or $5.12 a share, in the quarter that ended Nov. 30, which is an improvement from the record loss of $1.25 billion, or $7.92 a share, posted in the same period a year ago. However, the loss was still wider than Wall Street’s projection of $2.18 a share. The company was able to narrow its loss from a year earlier by cutting land purchases by about 70%, trimming expenses by 44%, and making progress in clearing its backlog of homes. It wrapped up the quarter with $1.1 billion in cash and nothing outstanding on its credit facility. However, housing conditions remain in turmoil. Lennar’s new-home orders plummeted 46% while home prices declined 10% in the latest quarter. In 2009, the company plans to continue to slash its land purchases, cut back on the number of homes it builds, and further reduce its backlog. Jim Wilson, director of research and senior analyst with JMP Securities LLC of San Francisco, maintained his “outperform” rating on Lennar.