Stewart Hammered by Housing Slowdown; Net Income Drops 51 Percent
Stewart Information Services Corporation said today that its net earnings for 2006 dropped more than 51 percent, falling to $43.3 million from $88.8 million one year ago, due largely to sluggish volume in its U.S. residential title insurance business. The drop in earnings came in spite of an increase in revenue at the real estate information services giant, driven by the company's aggressive acquisition strategy during the past year. Stewart reported revenues of $2.5 billion for 2006, up from $2.4 billion in 2005. The company blamed the effects of a slowing housing market for its poor earnings, saying that a depressed housing market had reduced transaction volume handled by Stewart's direct operations, which primarily involves providing title insurance. Stewart said that market conditions had led it to lay off more than 11 percent of its workforce in title offices nationwide during 2006, or a total of 920 employees; the company has let go of an additional 180 employees since the start of 2007, it said. Title orders declined in the fourth quarter of 2006 by 13.4 percent from the same period a year ago, Stewart said, while orders were 12.7 percent less in December 2006 than December 2005. The company was tight-lipped regarding any discussion of the performance of its U.S.-based residential mortgage operations, preferring to discuss commercial and international growth prospects instead. Calls to the company for comments regarding its expectations for 2007, and in particular its expectations for its U.S. residential operations, were not returned by HW's publishing deadline. "Our growing commercial and international operations significantly contributed to our results in 2006 and we're very proud of our accomplishments in these areas," said Malcolm S. Morris, chairman and co-chief executive officer. "Commercial revenues have more than tripled since the beginning of the decade when we began a major push in this area. Our international operations enjoyed strong increases in profits in 2006. Although our international business represents a small percentage of total title revenues today, the growth potential is exciting." For more information, visit http://www.stewart.com.