Ryland plans cost-cutting program

April 20, 1995|By Kevin L. McQuaid | Kevin L. McQuaid,Sun Staff Writer

The Ryland Group Inc. plans to step up internal cost-control measures in 1995 in response to a nationwide downward spiral of new-home sales and construction, the company's chairman said at its annual shareholders meeting yesterday.

Ryland Chairman and Chief Executive R. Chad Dreier's comments about the future of the Columbia-based company, the nation's third-largest homebuilder, came one day after the U.S. Commerce Department reported that the pace of home building slumped nearly 8 percent last month to a two-year low.

"The housing market is flat at best," Mr. Dreier said after the meeting. "It makes sales harder. We'll have to be more competitive. We'll be putting more of a focus on cost control in 1995, focusing on purchasing, getting the best buys for our money. And we plan on doing a better job of controlling our overhead."

But Mr. Dreier said Ryland probably will avoid repeating layoffs as a cost-cutting measure. In 1994, more than 100 jobs were eliminated.

To counter higher interest rates and the slowdown in the housing market, Ryland plans to introduce new home designs and mortgage programs, enter new markets and reduce existing inventory in markets such as California, as it did in 1994.

Ryland has stated repeatedly that it believes homebuilding represents its best opportunity for profit in the future. That focus contributed to the sale earlier this month of its mortgage-backed securities unit to Norwest Bank in Minnesota, for $47 million.

Ryland, which in 1994 increased home sales by 9.6 percent to 9,121 homes, reported net income of $24.4 million last year, compared with a loss of $2.6 million in 1993. The 1993 results included a $45 million charge related to poor sales in California. Revenue in 1994 grew to $1.64 billion, up 17 percent from 1993.

Mr. Dreier also cited Ryland's strong homebuilding performance in Austin and San Antonio, Texas, as well as solid home sales in Denver, Phoenix and Indianapolis, as evidence that its homebuilding focus is working.

Ryland's stock ended at $14.375 yesterday, unchanged for the day, on the New York Stock Exchange.

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