ConDig (03-Oct-17). Lennar Corp posted a 5.6% hike in profit in the third quarter as revenues at the US homebuilder were boosted by higher home sales and prices.
Despite being impacted by the recent hurricanes of Harvey and Irma, the Miami, Florida-based homebuilder booked net income attributable to shareholders of $249.2 million, or $1.06 per share, for the quarter ended August 31, up from $235.8 million, or $1.01 per share, in the same period a year earlier.
It comes as revenue shot up 15% to $3.3 billion from $2.8 billion in the third quarter of 2016, while deliveries of homes increased 12% to 7,598.
New orders, which are often viewed as a key indicator of future revenue, increased 8% from a year ago to 7,610 homes.
Stuart Miller, chief executive officer of Lennar, said that after undertaking an assessment the company found that overall damage from Hurricanes Harvey and Irma earlier this month was minimal.
“Additionally, given the disruption from the preparation for the storms, clean-up after the storms, and restart and normalization of business operations, we maintain our estimate that approximately 950 closings will be pushed from 2017 into 2018,” said Miller.
“We expect that once we get past the short-term impact from the storms, there will be increased economic activity and an increased demand for new homes which will result in a broader range of opportunities for us as we look towards 2018.”
Earlier this month, Lennar Corp said that it expected delays to about 700 home deliveries in Florida, Georgia and South Carolina following the widespread impact of hurricane Irma. It also said that Hurricane Harvey was expected to impact about 120 new orders and deliveries in the third quarter, and delay deliveries of 130 homes in the fourth quarter.
Lennar reported that interest expense in the third quarter was $71.8 million, up from $62.7 million in the third quarter of 2016.
Hurricane Harvey devastated the Houston area earlier this month and caused widespread flooding. Estimates for the cost of Hurricane Harvey’s damage range from $65 billion to $190 billion and could end up being one of the most expensive disasters in US history.
The destruction from Hurricane Irma, which caused widespread damage across Florida and into Georgia and South Carolina this month, could cost between $50 billion and $100 billion.
D.R. Horton also cut its cash flow from operations forecast by 50% for fiscal 2017 earlier this month due to building delays following the hurricanes.
A shortage of homes persists in the US as home builders face lot and labor shortages, along with rises in building material costs, which is hampering the industry’s progress.
The impact of Harvey and Irma is expected to exacerbate housing shortages as labor is pulled in for rebuilding efforts and material costs increase.