NVR Profit Falls 43 Percent, Stock Gains
From Bloomberg News
NVR said second-quarter profit fell 43 percent, to $51.3 million ($8.64 a share) from $90.7 million ($14.14), as orders declined amid tougher mortgage guidelines and falling buyer confidence.
New orders and profit margins "continue to be negatively impacted by high levels of new and existing home inventories, affordability issues, a more restrictive mortgage lending environment and declining homebuyer confidence," the Reston-based builder of Ryan Homes said.
NVR, which sells most of its homes in the Washington area, has avoided the worst of the housing slump, which has hit hardest in places such as California and Florida.
NVR, led by Chief Executive Officer Paul Saville, is the only company of the 15 homebuilders in the Standard and Poor's Supercomposite Homebuilding Index to gain market value in the last 12 months. Shares had gained more than 8 percent, to $546.16, as of 11:15 a.m.
Orders declined 29 percent, to 2,670 in the three months ended June 30, and revenue dropped 23 percent, to $1.84 billion, the company said. Cancellations rose to 19 percent from 16 percent, the company said. Gross profit margins fell to 17.9 percent in the quarter from 18.1 percent in the year earlier as the company wrote down the value of deposits on land by approximately $5.8 million.
NVR's mortgage banking division closed $593.9 million in loans in the quarter, 30 percent less than a year ago, according to the statement. Operating income fell 39 percent, to $7.2 million compared with $11.7 million in the second quarter of 2007.
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