Homebuilder Toll Brothers Revenue Drops 41pc as Luxury-Home Demand Slumps

November 11 2008 - Toll Brothers Inc., the largest U.S. luxury homebuilder, said fourth-quarter revenue plunged 41 percent as the housing and credit crisis pummeled its business.

The shares fell as much as 5.8 percent in New York trading, losing 88 cents, or 4.6 percent, to $18.07 at 10:06 a.m. in New York Stock Exchange composite trading.

Homebuilding revenue slid for the 10th straight quarter, dropping to $691 million in the three months ended Oct. 31 from $1.17 billion a year earlier, Toll said today in a statement. The shares fell as much as 5.8 percent after cancellations rose as demand fell in October.

“Unfortunately, the preliminary signs of stability we had discussed in early September were upended by the past month’s financial crisis,” Chief Executive Officer Robert Toll said in the statement. Credit market disruption and falling stock prices have helped drive “home-buyer confidence and our traffic and demand down to record lows.”

Toll urged the federal government to act swiftly to help the housing market and recommended Congress cut mortgage rates and enact a buyer tax credit. Home prices slid 17 percent in 20 U.S. metropolitan areas in August as foreclosures rose, according to the S&P/Case-Shiller price index, and foreclosures reached the highest on record in the third quarter.

The Horsham, Pennsylvania-based builder was projected to have sales of about $647 million, according to the average estimate of 13 analysts surveyed by Bloomberg.

Fourth quarter cancellations rose to 233, or 30 percent of contracts, the company said. Net contracts signed fell 27 percent to $266.7 million for 539 homes, a drop of 18 percent.

Toll Revenue Drops 41% as Luxury-Home Demand Slumps
by Brian Louis and Peter Woodifield | Bloomberg