Centex swings to loss in first quarter
Centex swung to a loss in the first quarter on drooping home sales and lower revenue from financial services.
Losses for the first quarter were $195.66 million, down from earnings of $278.46 million in last year’s first quarter.
Net revenue, including home-building sales and revenue from Centex’s financial services business fell 31 percent to $1.94 billion, compared with $2.65 billion last year.
Home-building sales were $1.8 billion, down 32 percent from the same quarter last year. Home closings were down 27 percent to 6,095 total homes.
Revenue from financial services was down 35 percent to $15 million. Centex’s CTX Mortgage group originated loans for 78 percent of Centex home buyers during the first quarter.
“In the quarter, we reduced overhead expenses and unsold inventory,” said Tim Eller, Centex chairman and CEO. “We saw an improving cancellation rate in a difficult market. We remain focused on the fundamentals: selling homes, minimizing inventory, generating cash and attacking costs.”
Dallas-based Centex, founded in 1950, builds homes in 25 states.
American Standard sells bath and kitchen business
American Standard has found a buyer for its bath and kitchen business: Bain Capital Parnters, who has agreed to buy the group for $1.755 billion.
Bain Capital Partners is a global private investment firm — most recently, Bain Capital was one of four private investment firms to purchase Home Depot’s HD Supply unit.
Upon completion of the sale, Bain Capital will acquire all of American Standard’s bath and kitchen business, which had 2006 sales of $2.4 billion. The business manufactures and markets products under brand names including American Standard, Ideal Standard, Armitage Shanks, Porcher and Jado.
The sale closing is expected to occur early in the fourth quarter. American Standard said it will use proceeds of the sale primarily to repurchase common stock and reduce debt.
Earlier this year, American Standard announced its plans to separate its three business by selling bath and kitchen, spinning off its vehicle control systems business and retaining its largest business, in air conditioning systems and services. Following the spinoff and the sale, American Standard Cos. will change its name to Trane.
“This is a major milestone in our plan to separate American Standard into three focused, better understood companies,” said Fred Poses, American Standard chairman and CEO. “We believe that Bain Capital’s all-cash offer provides excellent value for our shareowners.”
Canada USW, forest companies reach stalemate in union negotiations
Over the weekend, nearly 6,500 members of the United Steelworkers (USW) union’s Wood Council in British Columbia went on strike, following a stalemate in negotiations with 31 member companies of Forest Industrial Relations [FIR], a bargaining group; Island Timberlands, a private forestry company; and timber company International Forest Products (InterFor).
The British Columbia coastal region accounts for 12 percent of total British Columbian softwood lumber production and 6 percent of total Canadian production, according to RISI (Resource Information Systems).
The USW issued a 72-hour strike warning that expired on July 21. InterFor workers joined the strike on Saturday.
“This strike is about stopping the race to the bottom that all forest workers are facing,” said Steve Hunt, USW Western Canada director.
Among the core issues argued by the USW are requests for severance for all workers affected by permanent mill closures — including employees who were laid off during downtime, prior to the permanent closure of the mill. The union also is requesting more input in making employee shift schedules and a halt to companies’ use of contracted, non-union employees to participate in union negotiations.
Several British Columbia-based forest products companies are affected by the strike, including West Fraser, one of North America’s largest lumber producers.
FIR, which represents West Fraser, Western Forest Products and 29 other large lumber producers, has argued conditions are difficult across the industry, and further concessions would put a further dent in an already difficult market.
Terry Lineker, CEO of FIR, said the market pressures faced by forest products companies mean employers must remain competitive or risk a position that “will severely damage the industry.”
FIR has proposed a wage increase of 2 percent effective June 15 of this year, and an additional 3 percent on June 15, 2008. The bargaining group also offered gain sharing “if FIR companies recover from the current downturn,” and agreed to some improvements in shift scheduling, according to a statement from FIR.