SAN FRANCISCO (Reuters) - Citing a difficult market for home builders, Pulte Homes Inc. (PHM.N) said on Tuesday it would cut 16 percent of its work force, adding to previously announced job cuts.
Pulte Homes said it expects a pretax charge in the current, second quarter of $40 million to $50 million related to the job cuts, mainly from severance costs and facility expenses from consolidation and administrative activities.
Most of the cuts will occur this quarter, the second-largest U.S. home builder said in a statement.
The company did not say how many jobs the latest cuts would affect and no spokesman was available for comment. The company’s Web site said it has 13,400 employees.
The company said it aims to reduce costs and improve operating efficiencies amid a “challenging operating environment that continues to exist in the U.S. homebuilding industry.”
Responding to the broad housing slowdown, Bloomfield Hills, Michigan-based Pulte Homes cut approximately a quarter of its work force in 2006 and earlier this year.
Slowing demand, rising mortgage interest rates and a tightening of credit amid rising defaults by subprime mortgage borrowers have battered home builders, forcing them to shelve building plans and to cut home prices to reduce inventory.
Sales of new homes rose 16.2 percent in April, the sharpest climb in 14 years as builder slashed prices a record 11 percent, underscoring the extraordinary steps they are taking to move houses.
“The homebuilding environment remains difficult and our current overhead levels are structured for a business that is larger than the market presently allows,” Richard Dugas, Jr., president and chief executive of Pulte Homes, said in the statement.
With its latest restructuring plan and other planned spending cuts, Pulte Homes said it expects reductions in 2007 pretax spending of $90 million to $110 million, excluding restructuring charges.
“On an annualized basis, these collective actions are expected to save the company approximately $200 million on a pretax basis,” Pulte Homes said in its statement.