Miami, FL, September 8, 2006--Homebuilder Lennar Corp., reduced its third-quarter earnings outlook on Friday, citing increased sales incentives driven by a soft housing market, as well as certain land adjustments.
The company now expects to post earnings per share of $1.25 to $1.35--well below last year's profit of $2.06 per share. On average, analysts polled by Thomson Financial are looking for much-higher earnings of $1.81 per share.
In June, Lennar reported second-quarter earnings of $324.7 million, or $2 per share, on $4.58 billion in revenue. Analysts' consensus estimate was $1.85 per share on $3.87 billion in revenue. But Lennar lowered its full-year view to a range of $8 to $8.25 per share from $9.25 per share, due to expected cancellations and slowing new orders.
President and chief executive Stuart Miller said Friday that current market conditions are causing the company to limit its land purchases, in an effort to stem large order declines.
"The U.S. housing market has continued to deteriorate. Given difficult market conditions, we have limited our land purchases while we have remained focused on even flow production and minimizing completed inventory. As a result of this strategy, we experienced only a slight decline of 5 percent in preliminary net new orders for the quarter. However, increased sales incentives along with certain land adjustments were the primary factors in lowering our earnings per share estimate," Miller said.
