Publication Date:
Tue, 2012-03-06 15:37
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The 2012 NAHB study indicates single-family builders cut operating costs by nearly 3 percent from 2008 to 2010, contributing to a positive net profit margin.
A new report from NAHB [1] shows single-family builders pulled in $7.1 million in revenue in 2010 and were left with $39,000 in net profit, a rate of 0.5 percent. Nearly 85 percent of revenue went into cost of sales, while almost 15 percent accounted for operating expenses.
The report, “The Cost of Doing Business Study: 2012 Edition,” surveyed single-family home builders nationwide in 2010 to see how their businesses performed. NAHB evaluated the data in comparison to survey results in 2008 and 2006.
While a 0.5 percent net profit rate is extremely low, it was an improvement over the previous study, when builders reported a negative net profit margin of 3 percent.
The share of total revenue that went to operating costs declined from the previous study, from 17.4 percent to 14.7 percent. This indicates that builders made some cutbacks to reduce operating costs in the two-year period. Operating expenses accounted for just over 13 percent of total revenue in 2006.
Compared to four years prior, the value of total assets held by builders dropped by more than half, from $13 million to just more than $6 million. On the other hand, liabilities also dropped while total equity remained relatively stable. This meant sizeable improvement in current ratio and debt-to-equity ratio.
To read the rest of the story, click here [1].
