Homebuilder Hovnanian Enterprises ( HOV) reported strong growth in second-quarter earnings and revenue and raised its guidance for the fiscal year, saying that despite the weakness in the economy, demand for new homes remains solid in most of its markets.

The company reported net income of $52.6 million, or $1.60 a share, on $679.8 million in revenue for the second quarter. In the same quarter last year, the company earned $25.9 million, or 80 cents a share, on revenue of $561 million. Hovnanian said the results reflect "healthy consumer demand and the company's focus on profitability improvements."

Deliveries increased to 2,496 homes, rising 16% from the second quarter in 2002. Net contracts climbed 16% from last year to 3,389 homes, valued at $909.7 million. As of April 30, Hovnanian's contract backlog was 5,300 homes with a sales value of $1.4 billion, an increase of 18% from the same period last year.

The company is now forecasting earnings for fiscal 2003 of $6.50 to $6.75 a share, up from a previous projection of $5.25 to $5.50 a share, and is providing initial earnings guidance of $7.50 a share for fiscal 2004. The revised 2003 estimate represents a range of net income from $211 million to $219 million, a 53% to 59% increase from fiscal 2002.

Hovnanian also said revenue for this year is expected to climb to nearly $3 billion, and deliveries are seen exceeding 10,500 homes.

"Despite weakness in the economy, we continue to experience solid demand for new homes in most of our markets," the company said in a press release. "We will be announcing our new home orders for the month of May next week, and month-to-date results indicate that it has been another strong month for the company. We are encouraged by the depth of our backlog as we head into the second half of fiscal 2003."

On average, analysts polled by Thomson First Call were looking for a profit of $1.21 in the second quarter. Analysts are expecting earnings of $5.70 for the full year.

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