* Q1 gross margin down to 21.1 pct vs. 22.7 pct yr earlier
* Q1 orders up about 12 pct
* Q1 deliveries up 12.9 pct
(Adds details, shares)
March 21 Lennar Corp, the second-largest
U.S. homebuilder, reported a drop in quarterly gross margin that
overshadowed a higher-than-expected profit, as the company
struggled with higher land and construction costs.
Lennar's shares were down 3.2 percent at $50.97 in morning
trading on Tuesday.
Gross margin fell to 21.1 percent in the quarter ended Feb.
28 from 22.7 percent a year earlier, the company said.
Although a robust labor market is supporting the housing
market, this is unlikely to translate into a homebuilding boom
as builders continued to complain about rising material prices,
higher mortgage rates and shortages of lots and labor.
Bigger rival D.R. Horton Inc, which reported results
in January, also posted a drop in gross margin in the quarter.
However, Lennar said it expected the challenges in the
market to have a positive effect on pricing.
"In this environment of accelerating sales pace, together
with limited land and labor, and tight inventory particularly at
the lower price points, we believe we are positioned for
increased pricing power and solid earnings going forward," Chief
Executive Stuart Miller said.
Orders, a key indicator of future revenue for homebuilders,
rose about 12 percent to 6,483 homes in the first quarter ended
Feb. 28, its biggest rise in more than one and a half year.
The Florida-based builder sold 5,453 homes in the quarter,
compared with 4,832 homes last year. However, the average sales
price remained flat at $365,000.
Net income attributable to Lennar shareholders fell to
$130.8 million, or 56 cents per share, in the quarter from
$144.1 million, or 63 cents per share, a year earlier.
Excluding items, the company earned 59 cents per share,
below the average analysts' estimate of 55 cents per share,
according to Thomson Reuters I/B/E/S.
Revenue rose to $2.34 billion from $1.99 billion. Analysts
had estimated revenue of $2.19 billion.
Up to Monday's close, shares of the company had risen 10.6
percent in the past 12 months.
(Reporting by Arunima Banerjee in Bengaluru; Editing by Anil