Ryland Group's profits down sharply for quarter, year Rebound expected in homebuilding

February 07, 1992|By Ellen James Martin

Earnings for the Columbia-based Ryland Group were off sharply during the fourth quarter and year, as the company's booming financial-services group continued to cushion a severe slide in homebuilding operations.

Nationally, the recession drove housing starts to a 46-year-low in 1991. But Ryland is already predicting that its homebuilding business is due for a rebound, said Nancy L. Smith, a Ryland Group vice president.

"We're already seeing an improvement in consumer confidence, based

on an improvement in new home orders in January," Ms. Smith said.

"January was a surprisingly strong month," Roger W. Schipke, Ryland's chairman and chief executive officer, said in a prepared statement.

"New home orders totaled 983 compared with 487 a year earlier."

Ryland's homebuilding operations reported a 1991 pretax loss of $16.3 million, primarily because of a 12 percent decline in the number of homes settled and losses from joint-venture projects in Southern California, a company statement said.

Soil-stability problems at a major Southern California joint-venture development led to a $13 million pretax charge in the fourth quarter, the company said.

Ryland's homebuilding group earned $22.2 million in 1990, the

company said.

The homebuilding industry is going through a shake-out that is causing the demise of many smaller players, Ms. Smith said.

As a result, prospects for larger companies in the field with more access to capital should improve, she said.

"In the markets where we do business, Ryland will be able to pick up market share because so many of the smaller builders will not be able to continue operation under the new banking regulations," Ms. Smith said.

"Financial services not only demonstrated its contracyclical value in buffering homebuilding's downturn," Mr. Schipke said, "but also emerged as an innovative, entrepreneurial stand-alone business that has grown

far beyond the original charter of providing mortgages for Ryland's homebuilding customers."

Financial-service revenues were up nearly 80 percent in the quarter, to $28.4 million and produced operating profits of $11.6 million, more than triple comparable 1990 results.

For the full year, the financial group's revenues were up 45 percent, to $78.8 million, and operating earnings were $28.4 million, again more than triple 1990 levels.

Three months ended 12/31/91

... ... ... ... ...Revenue... ... ... ... ... ... Net... ... .. Share

'91... ... ..$343,835,000... ... ... ... 1,694,000... ... .. $0.08

'90... ... . $335,630,000... ... ... ... 3,887,000... ... ... $0.24

% change... ... ... . +2.4... ... ... ... ... ..-56.4... ... .. -66.6

Year ended 12/31/91

... ... ... ... ...Revenue... ... ... ... ... ... Net... ... ... Share

'91... ... $1,214,295,000... ... ... ... 9,451,000... ... .. $0.52

'90... ... $1,312,670,000... ... ... ... 21,797,000... ... ... $1.42

% change... ... ... ..-7.5... ... ... ... ... ..-56.6... ... ... -63.3

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