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Lennar misses profit estimates on deal delay; shares down


By Ajmera

(Reuters) - No. 2 U. S. homebuilder Corp on Wednesday reported a surprise drop in quarterly profit as an undisclosed "strategic" got pushed out to the first quarter.

The company said proceeds from the deal would now benefit from lower taxes, but its fell about 1.7 percent in premarket trading.

Lennar's and total revenue, however, rose more than expected in the fourth quarter, pointing to a robust U. S. market.

rose 11.5 percent, with buyers signing up for 7,357 homes in the quarter ended Nov. 30.

The average selling price for home deliveries rose 8.4 percent to $388,000 for the fourth quarter.

Lennar's have climbed for seven straight years on a year-over-year basis, as the U. S. housing market recovered from the sub-prime crash of 2007-2008.

"Our ... benefited from strong demand for homes, low unemployment, favorable interest rates and increased consumer confidence," said in a statement.

"enthusiasm for the strength of the economy, combined with the added tailwinds of recent tax law changes, continue to propel the housing market forward."

In October, agreed to buy smaller rival for $5.7 billion in a deal that will make it the largest homebuilder in the and give it more tools to deal with higher labor and land costs.

The move reflected the pressure on builders due to a shortage of skilled labor that is constraining the supply of homes and pushing costs up even as U. S. house prices rise for a seventh straight year.

Lennar's total revenue rose 12.1 percent to $3.79 billion, beating the average estimate of $3.57 billion, according to I/B/E/S.

Net income attributable to fell 1.2 percent to $309.6 million, or $1.29 per share, missing the average estimate of $1.48 per share.

A loss of about $12 million in Lennar's Rialto business, which manages commercial and financing, also dented profits during the quarter. Some analysts had expected a gain of about $5 million at the business that accounts for about 2 percent of the total revenue.

(Reporting by in Bengaluru; Editing by Saumyadeb Chakrabarty)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, January 10 2018. 22:01 IST