Toll Brothers returns to profit on flat market
By Chris Sleight26 August 2010
US-based luxury house builder returned a net profit of US$ 27 million for the third quarter of the year ending 31 July. It was a marked turnaround from the US$ 472 million loss for the same period last year. However, for the year to date the company is still in the red with net losses of US$ 54 million, compared to the figure of US$ 644 million for the first nine months of fiscal 2009.
The company has seen revenues fall this year, with sales to date of US$ 1.09 billion, compared to US$ 1.29 billion for the same period last year. However, that gap looked like it was narrowing in the third quarter, with only a 1.5% difference between Q3 2010 revenues of US$ 454 million and the US$ 461 million achieved last year. The company said that although sales had declined in Dollar terms, the number of units had edged up by +2%.
Toll Brothers also said its backlog of work had improved since last year. At the end of July the order backlog stood at US$ 939 million, or 1636 housing units - an increase of +1% in both Dollar and unit terms from a year ago.
Commenting on the results, Toll Brothers CEO Douglas C. Yearley Jnr said, "We are pleased to return to profitability this quarter, especially with volumes down -65% from our peak. Although revenues and unit deliveries for the quarter were relatively flat compared to one year ago, our gross margin, before write-offs, improved 350 basis points."
Executive chairman Robert I Toll highlighted the fall-off in the market that had been seen during the quarter. "The acceleration we saw in deposits and traffic through the first few weeks of May was not sustained during the remainder of the quarter. Our observations were subsequently borne out over the following weeks by data showing declining consumer confidence and weaker housing activity," he said.