Having “hit kind of a wall” in 2006, Red Bank-based Hovnanian Enterprises is being cautious about 2007, a company executive says in an interview in today’s Star-Ledger.
J. Larry Sorsby, HOV’s chief financial officer, tells the Ledger’s Judy DeHaven that the company is “not trying to grow through a downturn.
“We’re making the right steps to shrink in a downturn, in terms of our balance sheet, making sure we have the right capital structure in place and the balance sheet to weather the storm.”
Sorsby also explains, somewhat cryptically, why the company didn’t foresee the suddenness and magnitude of last year’s housing market slide:
“I don’t think anybody expected it. Typically, downturns in this industry are prompted by economics … just a general poor economy. And none of that happened.
This was a downturn started by something we’ve never seen before, and I’ve been in the industry for about 30 years. This was (a combination of) consumer sentiment and … the investor (driving) prices to an unaffordable level in certain markets. It’s just a different kind of downturn that none of us anticipated.
As long as the economy is good, historically this industry has performed extremely well. And that’s what we expected to continue. So we were surprised. And I think the whole industry was surprised.”
redbankgreen has previously reported on HOV’s fourth-quarter loss and how the company’s efforts to shrink costs have led it to cut back on plans to take additional office space in the office building under construction across West Front Street from its new headquarters.
