Lennar’s Profit Exceeds Estimates as House Sales, Prices Rise

U.S. biggest home builder Lennar Corp. posted profit that exceeded analysts’ estimates on higher home sales and better prices in a recovering housing market.

Net income for the three months ended Feb. 28 rose to $78.1 million, or 35 cents per share, compared to $57.5 million, or 26 cents per share a year ago. This exceeded the median estimate of 28 cents a share widely expected by most analysts.

The profit could have been higher if the tax provision of $45.9 million was not included in this quarter, up from a tax benefit $3.6 million a year ago. Revenue surged 38 percent to $1.36 billion, up from $990 million beating analysts’ estimate of $1.28 billion.

On announcing the results, Lennar’s CEO Stuart Miller said today that “the company is optimistic the market will continue to recover as the fundamentals driving it are still in effect”.

“We believe that the housing market is still in the early stages of recovery and that our company is uniquely positioned to enhance absorption, increase market share and grow profitability,” said Mr. Miller.

Miami-based Lennar saw new order volumes rise 10 percent to 4,465 homes; while deliveries grew 13 percent to 3,609 homes as median home prices surged $18 percent to $316,000 from $269,000.

Operating profit for its home-building division grew to more than hundredfold to $160.2 million, while its financial services segment fell 72 percent to $4.5 million.

Lennar’s shares were down 1 percent at $40.93 at morning trade in New York after earlier rising as much as 2.8 percent. This contrasts to S&P’s Supercomposite Homebuilding Index, which declined 1.4 percent after the Federal Reserve hinted at possible interest rates increase by mid-2015.