When Roger Schipke came to Ryland Group Inc. in May, the company seemed to be in a period of healthy growth, as it had been for years. Now, as Schipke prepares to take over as chief executive of the Columbia, Md., home-building firm, profits are plummeting.

But at least there still are profits. That's better than many other companies in the industry can say.

It has been a stormy year for home builders. A downturn in sales that began last year has spread and grown progressively worse as wary consumers back away from home purchases or are unable to sell their homes to finance new ones. New England and the Mid-Atlantic area are mired in various degrees of slumps. Even the once-mighty California market has begun to crack.

But Ryland seems to be weathering the storm. The company, which built 9,215 houses nationwide last year and is the nation's second-biggest home builder, is reaping the benefits of years of conservative management and careful diversification. At a time when its cross-town rival, NVR L.P., is fighting for survival after taking on too much debt in good times, Ryland is forging ahead by making acquisitions, negotiating to sell homes overseas and looking for new markets.

Ryland has grown steadily, but not spectacularly, in its 23 years, and its homes aren't known for their design flair. But the company has stuck to its guns -- keeping its debt low, selling a lot of modestly priced homes to buyers who are just beginning to climb the home ownership ladder and carefully diversifying to flatten out the ups and downs of the home-building industry.

Granted, Ryland hasn't had the sky-high returns that more leveraged builders exhibited in good times. But Ryland isn't as vulnerable to the gut-wrenching lows experienced by competitors such as NVR in the latest slump.

"This company has a real bright future in the next upturn," said Michael Mead, vice president of research at Legg Mason Inc., a Baltimore brokerage firm.

Ryland hasn't been immune to the latest market downturn: It is suffering through a "stutter step" in its growth, as incoming Ryland chief executive Schipke calls it, as the slump hits its two biggest markets -- California and the Mid-Atlantic.

Profit in Ryland's third-quarter, which ended Sept. 30, fell 47 percent compared with a year earlier, to $5.8 million from $10.9 million, following a 46 percent drop in profit in the second quarter. Third-quarter revenue fell to $334.1 million from $368.5 million. Employment has fallen to 2,366 people, from 2,700 earlier this year.

Ryland executives are clearly concerned about the drop in the company's stock price, 89 percent of which is held by institutions. Company insiders own only 5 percent. Ryland stock closed at $11.37 1/2 Friday on the New York Stock Exchange, down almost 50 percent from its 52-week high of $22. Analysts said it is less an indicator of Ryland's performance than it is a comment on the general state of affairs in the home-building industry.

C.E. "Ted" Peck, Ryland's chairman and chief executive, has warned that the company won't turn around anytime soon. "Long term, it's going to play out well for us," he said. "In the short term, we're going to go through a lot of the pain that every other builder is going to go through."

And at this critical time, the company's leadership is changing. After guiding Ryland through eight successful years, Peck, a soft-spoken man who refers to his tenure as "my lap of the relay race," is retiring from the chief executive's job Dec. 1.

Peck, 64, who took over the company from founder James P. Ryan, guided it from $230 million to more than $1 billion in annual revenue, and is generally known as a superb manager who built Ryland into a smooth-running home-building giant.

"They're one of the best-managed companies in all of American industry," said Barbara Allen, chief housing analyst at Kidder, Peabody and Co. in New York.

Peck is handing over the reins to Schipke, 53, a newcomer to the home-building industry who joined the company as president last May.

Schipke will be entrusted with the delicate task of helping Ryland take advantage of myriad tempting opportunities that will come up in the slumping market, while also ensuring that Ryland isn't sucked into the morass by overextending itself.

"The biggest challenge for Ryland to deal with right now is, 'When is the right time to charge ahead?' " Schipke said. "We don't want to hunker down so much that we can't move quickly when the market turns ... It's a tough balancing act."

Throughout its 23 years, Ryland has worked to find balance in the notoriously volatile home-building industry. It has expanded, but not aggressively, and it has taken a similarly cautious approach to land and building.

By moving carefully into 13 states, its Ryland Building Co. subsidiary has evened out some of the geographic ups and downs of the market. For example, strong results in its Maryland, Virginia and California markets in 1988 offset poor performances in its Florida and Texas divisions.

And the strength of the Midwest now is taking some of the edge off the prospect of slowing sales on both coasts. So far this year, Ryland has settled on 6,158 homes, 7 percent fewer than in the first nine months of last year. But new-home orders dropped 38 percent in the third quarter.

Ryland eschews heavy investments in land, which means it isn't burdened with the land debt that is crippling other builders. In the recently completed third quarter, for instance, it had just $32 million in land held for future development, not including its California operations. The amount of land is a $10 million decrease from the previous third quarter. Put another way, its land holdings were only about 20 percent of its stockholders' equity, while land holdings among many U.S. builders exceed their equity, analysts say.

To keep from being too heavily invested in land, Ryland uses the options method. That is, it puts down a small deposit, usually less than 10 percent, on a certain number of finished lots in a development. In most cases it buys each lot only after it has sold a house for that location. But that means it doesn't have the cushion of inflation and rising land values that, in a strong market, offer it an automatic profit even before it builds and sells a house.

Thus, Ryland must make its money on the house -- and that means paying strict attention to costs.

"We don't expect to make a lot on the land," said Arthur Titus, a Ryland senior vice president who oversees the company's building operations in Philadelphia, Maryland and Virginia. "We believe fundamentally that we're home builders."

That options method, however, brings on a new set of challenges. During the frenzied buying and selling in 1987, for example, Ryland ran into problems in the Washington area, particularly in Northern Virginia, when land developers abandoned the options method and demanded that home builders purchase lots outright. As a result, competing builders said, Ryland missed out on the boom in Fairfax County.

Aiming to avoid such problems in the future, Ryland has launched a division called Ryland Ventures, which forms joint ventures with local developers and builders to participate in development projects in areas where it can't simply buy options on land.

It has about 20 joint venture partnerships nationwide, including four in the Washington area. But as the real estate market slows and the land availability crunch eases, Ryland Ventures is seeing increased opportunities in another area -- helping to bail out troubled projects. Last April, Ryland teamed with the William A. Hazel Co. to buy a portion of the Cascades development in Loudoun County from its financially troubled developer, Kettler & Scott.

Through its Ryland Building Systems division, Ryland has tried to standardize as much as possible the process of building a house to control costs and quality. In all of its markets except California, Denver and Phoenix, it avoids the traditional "stick-built" method, in which homes are constructed on a site by using subcontractors.

Instead, Ryland workers gather the materials to construct a house at five plants around the country. The materials, such as the walls, roof trusses, floor joists and trim materials, are inspected, assembled and then loaded onto a truck in the order in which they will be needed. They are brought to the home site after a foundation has been prepared.

"That means we don't have to have a purchasing agent out in the field {and} we don't have to hassle with so many things that haven't shown up at the right time," said Peck. The houses are then built in about three months. Through this "Ryland system," as the company calls it, it has managed to maintain a consistent 16.2 percent gross margin on its houses.

To make even more money from this system Ryland is negotiating to sell its panel-organized housing to contractors in Israel, where the influx of Soviet Jews is creating a severe housing shortage, Schipke said. Ryland also is looking toward Eastern Europe, where it sees a ready market for quickly built, quality houses.

Ryland has a modular home division, but its performance has proved to be somewhat disappointing. Its modular homes are 90 percent completed in two Ryland factories, right down to the electrical wiring and the carpeting, and then trucked to homesites and assembled.

Ryland is looking to augment its original plan to sell the modular homes mostly to local builders in small cities and rural areas and is exploring their use in the country's crumbling inner cities. It has sold several hundred of the homes to the Enterprise Foundation, a Baltimore corporation that builds affordable housing. "It would look like a good market for us going forward," Schipke said.

Ryland augments its home-building business with its financial services subsidiary, Ryland Mortgage Co., which isn't as vulnerable to the swings of the home-building side of the business.

The subsidiary, set up in 1978 to arrange mortgage financing for its home buyers, has branched out into a variety of financial instruments, including issuing mortgage-backed securities and servicing mortgage loans. These services provide a steady stream of income no matter how the real estate market is performing. In 1989, they contributed 18 percent of Ryland's earnings.

Ryland's latest acquisition was in October, when it purchased the home-building business of a Jacksonville, Fla., builder. Executives, who put together an additional $265 million line of credit earlier this year, said they're looking at other acquisitions, but declined to be specific.

Those decisions will be made by Schipke, who joined the company earlier this year as president of Ryland Group Inc. after eight years as the president of General Electric Co.'s $2-billion appliance division. His experience at GE wasn't entirely pleasant. A revolutionary new refrigerator compressor, designed while he headed the division, turned out to be a dud. GE voluntarily replaced the defective compressors in more than 1 million refrigerators.

The memory clearly still pains Schipke, even though he was praised by GE colleagues for acting quickly and decisively to correct the problem. "It's a great experience," he said ruefully. "It's just not one you want."

Schipke, whose soft-spoken manner bears a remarkable resemblance to Peck's, said that, as chief executive, he plans no major strategic shifts from the directions Peck set. Keeping a strong balance sheet is the "number one priority," he said, even though "it won't be pretty on the profit side."

Both Schipke and Peck said they see the latest housing slump as an opportunity to grab more business in an industry where no single company holds even a 1 percent share of the market. Meanwhile, the company is pondering the idea of stressing its financial strength in its advertising and isn't worrying too much about competitors.

"Competitors will come and go," said Peck, "and we'll just keep on doing our thing. I think we'll do okay."