October 3, 2018 / 10:14 AM / a year ago

Lennar cuts forecast for orders, deliveries citing Hurricane Florence

(Reuters) - Lennar Corp (LEN.N), the No. 2 U.S. homebuilder, cut its forecast for fourth-quarter orders and deliveries on Wednesday, citing the impact of Hurricane Florence and sluggishness in the market.

FILE PHOTO: A Lennar model home is seen at a development in Arvada, Colorado September 17, 2014. REUTERS/Rick Wilking

The company’s shares fell 2 percent in afternoon trading and weighed on those of rivals such as D.R. Horton (DHI.N) and PulteGroup (PHM.N).

Hurricane Florence flooded large parts of U.S. Southeast last month, causing billions of dollars in damage.

The Miami-based builder expects fourth-quarter deliveries to be 14,500, down from its previous forecast of 15,000, company executives said on a post-earnings call with analysts.

It also lowered its orders forecast for the quarter to 11,400 homes from 11,600.

In the third quarter, orders, a key indicator of future demand, rose 61.9 percent to 12,319 homes, but missed analysts’ estimate of 12,546 homes, according to Thomson Reuters I/B/E/S.

Several economic data reports have pointed toward moderating growth in the industry, as a short supply of homes and a spike in labor and raw material costs are forcing builders to hike home prices, in turn, dampening affordability. (reut.rs/2QqTXmC)

“Over the past quarter, market data has sent mixed signals about the current state of the housing market in general,” Executive Chairman Stuart Miller said on the call.

Lennar said it is “keenly focused” on construction cost savings. The company’s adjusted gross margins fell to 21.9 percent in the third quarter from 22.8 percent a year earlier.

Overall, U.S. home prices are set to rise this year at the fastest pace since 2015 and at more than double the rate of pay growth and consumer price inflation for the sixth year in a row, according to a recent Reuters poll.

Earlier in the day, the company reported third-quarter profit and revenue that topped Wall Street estimates, as it sold more homes at higher prices.

The average selling price increased 10.7 percent to $415,000 in the quarter.

Net income attributable to Lennar rose about 82 percent to $453.2 million, or $1.37 per share.

According to Thomson Reuters I/B/E/S, the company’s earnings excluding a tax benefit and an acquisition-related charge were $1.30, above the average analyst estimate of $1.19.

Revenue rose 73.9 percent to $5.67 billion, beating analysts’ estimate of $5.64 billion.

(This version of the story has been refiled to correct syntax in first paragraph)

Reporting by Arunima Banerjee in Bengaluru; Editing by Maju Samuel and Sweta Singh

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