D.R. Horton Inc., the biggest U.S. homebuilder, reported a narrower quarterly loss Tuesday that beat analyst estimates, sending shares up.
Horton (DHI, Fortune 500) reported a first-quarter loss of $62.6 million, or 20 cents per share, compared with a loss of $128.8 million, or 41 cents per share, a year earlier.
Analysts had predicted a loss of 56 cents per share, according to Reuters Estimates.
The results included $56.2 million in pre-tax charges for inventory impairments and write-offs of costs for land option contracts the company does not intend to pursue. Last year, the company reported charges for similar items of $245.5 million.
Throughout the U.S. housing downturn, considered by most to be the worst since the Great Depression, builders have been forced to impair the value of their land, much of it bought at peak prices during the boom years of 2002-2006.
Homebuilding revenue fell to $900.3 million from $1.7 billion, reflecting the ongoing difficulties of an operating environment in which a glut of supply and tight lending standards should result in further reductions in home prices, wrote Soleil Group analyst Anna Torma instant cash advance.
In these conditions, builders have collectively shifted their focus to generating cash as a means of surviving the downturn, even at the expense when necessary of profitability.
Horton, for example, generated $196 million in cash from operations in the quarter, "reflecting the company’s aggressive pricing strategy and focus on cash," wrote Credit Suisse analyst Dan Oppenheim.
The company ended the quarter with $1.9 billion in cash, and JPMorgan analyst Michael Rehaut noted approvingly: "Cash flow and balance sheet remain strong, in our view."
Horton’s shares were up 16.69%, or $1.02, at $7.13.
Shares in Japan’s Hitachi Ltd dived 17 percent to a near 29-year low on Monday after its warning of a record $7.8 billion annual loss due to weak sales, a firmer yen and costs of restructuring its sprawling operations.
Hitachi lost $1.9 billion in market value as investors damped its shares after Friday’s warning of what would be the biggest ever full-year loss at a Japanese manufacturer and would wipe out a third of its shareholders’ equity.
Hammered by the global recession, a growing number of electronics makers including Sony Corp and Toshiba Corp have issued loss warnings.
Hitachi’s automotive components business has been battered by slumping car sales worldwide, while steep price falls, fierce competition and anemic demand are hurting its flat-screen TV operations, prompting it to announce a $2.2 billion cost-cutting plan on Friday.
“Since Hitachi’s business portfolio covers a wide range, it was seen resilient to a downturn compared to companies like Toshiba that focus on the chip sector,” said Standard & Poor’s analyst Hiroki Shibata.
“But now its automobile, semiconductor, industrial equipment, flat TV — almost all of its operations — are facing an earnings slump, and conditions are very, very severe for it,” he said. “It will probably take a long time to recover.”
Shibata said any restructuring would take time for a big company like Hitachi, Japan’s largest electronics maker with products ranging from rice cookers to nuclear reactors, and suggested it could need more drastic steps to turn itself around.
Hitachi said on Friday it now expects to post a net loss of 700 billion yen ($7 absolutely free credit report.8 billion) for the business year to March 31, also hurt by a write-down of deferred tax assets following a dramatic fall in taxable income across the group.
The projected loss is far bigger than the consensus for a 54.8 billion yen loss in a poll of 12 analysts by Reuters Estimates before the revision, and compares with the company’s previous forecast of a 15 billion yen profit.
RENESAS HURTS
The massive loss warning led Moody’s Investors Service to downgrade its long-term debt ratings on Hitachi to A2 from A1, which could raise its borrowing costs. It puts Hitachi’s ratings under review for a possible further downgrade.
Hitachi still expects to book an annual operating profit, but cut the forecast by 90 percent to 40 billion yen. Its shares closed down 17 percent at 244 yen, the lowest since April 1980.
The electronics conglomerate said it would exit unprofitable businesses, close plants and take other restructuring steps in a bid to cut 200 billion yen in fixed costs by March 2010.
Hitachi, which has about 400,000 group employees, also plans to cut jobs as part of restructuring, but did not say how many.
“Hitachi’s restructuring has been a lap behind its rivals and it has had many things to tackle, but its earnings were strong until the first half because the market was good,” said Daiwa Institute of Research senior analyst Masaharu Sato.
St. Louis Post-Dispatch
The Center for Emerging Technologies will get a $1 million donation from Monsanto Co., pushing the biotech incubator closer to its goal of breaking ground this year on a $28 million laboratory building.
The St. Louis-based center requires about $18.5 million to start construction of the building. After Monsanto’s contribution, the center now has close to $16 million . CET already has cleared the site on Laclede Avenue for the three-story building, said Michele Rutledge, the vice president for resource development.
Wet labs will make up 60 percent of the "innovation center" CET plans to erect near its buildings in the 4000 block of Forest Park Avenue low fee payday loans. Rutledge said St. Louis needs more wet labs to nurture startups and keep them in the region when they grow.
"If there’s no place for these baby companies, they’ll leave," she said.
Since last summer, CET refined the lab building’s plan to trim $1.5 million in costs without sacrificing size or features, Rutlege said.
tbryant@post-dispatch.com | 314-340-8206
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