Pulte plans for return to profits

Bloomfield Hills-based Pulte Homes Inc., which posted a $507.6 million second-quarter loss, plans to cut costs and better manage its land assets as part of a plan unveiled Thursday to return the firm to profitability.

Responding to investor concerns, Richard Dugas, Pulte's president and CEO, said the company also would take other steps to improve cash flow and minimize spending as part of its plan to return to profitability by the end of the third quarter.

"We will continue our focus on presales, which ultimately close at a better margin," Dugas said. "We will continue our efforts to drive down house inventory and curb all unnecessary land spending."

He conceded, however, that tough market conditions will continue as the company struggles to recover from its third consecutive quarterly loss.

Pulte's loss followed an $85.67 million shortfall in the first quarter of this year, bringing year-to-date losses for the nation's third-largest home builder to $593.2 million. The company is projecting earnings of $0.10 to $0.20 per share next quarter, compared with losses around $2.10 this past quarter.

"Home builders clearly have been hit by the housing market woes," said Bob Walters, chief economist with Livonia-based Rock Financial.

Steven Petruska, Pulte executive vice president and COO, said the company suffered significantly notable downturns in sign-ups for presale homes in once-stellar markets such as Atlanta, where sales have slipped 51 percent since last year. The company reported flat sales in Michigan.

A bright spot for Pulte was Orlando, Fla., where the company saw sales increase by 83 percent in the second quarter compared with the same period in 2006.

But a rise in sales there and in other marginally improving regions was realized through major discounts on so-called "spec" homes, those already built by a developer like Pulte and sold as-is, with limited buyer input for finishes and fixtures.

Turning nationwide sales around will involve a big sales push to encourage customers to buy homes before they are built, Dugas said.