Bloomberg News

PulteGroup Reports Fourth-Quarter Profit After Cutting Costs

February 03, 2012

(Updates to add impairments, revenue and closings starting in fifth paragraph.)

Feb. 2 (Bloomberg) -- PulteGroup Inc., the largest U.S. homebuilder by revenue, reported its first quarterly profit since June 2010 as the company incurred lower writedowns, increased prices and cut costs.

Net income was $13.8 million, or 4 cents a share, compared with a loss of $165.4 million, or 44 cents, a year earlier, the Bloomfield Hills, Michigan-based company said today in a statement. Revenue from home sales increased 1 percent from a year earlier to $1.17 billion.

PulteGroup has been trimming expenses as U.S. demand for new houses remains weak. Home purchases and construction will improve in 2012, contributing “modestly” to economic expansion after acting as a drag on growth since 2006, according to a Fannie Mae forecast last month.

“They are reasonably well-positioned for a recovery,” David Goldberg, an analyst with UBS AG in New York, said yesterday in a telephone interview. “We like the fact that they have diverse buyer segments, including the active adult, and that’s going to help fuel growth as the market recovers.”

Results for the quarter included an impairment of about $66 million related to mortgage, land and debt repurchase, partially offset by $39 million of land-sale gains and tax benefits. A year earlier, the company wrote down $196 million in land and restructuring costs.

The results “demonstrate the company’s continued progress on our initiatives to expand margins and lower overhead costs,” Chairman Richard Dugas said in the statement.

Higher Revenue

The rise in home sales revenue was driven by a 3 percent increase in the average selling price to $271,000. Closings fell 2 percent to 4,303 homes. Net new orders increased to 3,084 houses from 3,044 a year earlier.

The fourth quarter is typically the strongest period for U.S. homebuilders because many buyers sign contracts in the spring and companies push to complete deals by the year’s end, according to Goldberg.

Earnings were released before the start of regular U.S. trading. PulteGroup gained 24 percent this year through yesterday, compared with a 13 percent increase in the Standard & Poor’s Supercomposite Homebuilding Index of 11 companies.

--With assistance from Andrew Blackman in Berlin. Editors: Christine Maurus, Josh Friedman, Ross Larsen.

To contact the reporter on this story: Prashant Gopal in New York at pgopal2@bloomberg.net.

To contact the editor responsible for this story: Daniel Taub at dtaub@bloomberg.net.


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