K&B cuts full-year forecast as market deteriorates

French housing developer Kaufman & Broad (K&B) said on Thursday that it has downwardly revised its earnings forecast for the full year in 2008 due to the 'significant slowdown in the French housing market' which saw total housing orders fall 30% to EUR 594.7mln in the first half.

The company now expects full-year revenues to decline by around 5%, compared with its forecast at end-2007 of a 5% increase. Gross margins are expected to come out at 18-20%. To counter the downturn, K&B's CEO Guy Nafilyan said the company had decided to step up its efforts to reduce property development costs in three critical areas - land, project design and construction costs - and to develop a plan to reduce operating costs.

'The slowdown in the French housing market, which was more pronounced than expected in the second quarter, impacted both our activity and results in the first half of 2008,' Nafilyan said.

K&B said that consolidated net revenues amounted to EUR 586mln in the first half, down 6.1% year-on-year. The French developer blamed a change in bank lending policies, higher interest rates and buyers' wait-and-see attitude for the decline.

At end-May, K&B had 316 housing programmes on the market, including 68 in Ile-de-France and 248 in other regions, amounting to a total 7,483 units.