TAYLOR Wimpey reported an enormous first-half loss yesterday as it warned that house prices were likely to continue to slide.
Britain's largest house builder by volume, Taylor Wimpey registered a loss of £1.54 billion for the six months to 30 June, after a major write-down in the value of its land bank and intangible assets.
Even excluding the write-downs, Taylor Wimpey'
s profits collapsed to £4.3 million, down from £119.8m for the first half of 2007. As expected, the company cancelled its dividend.
Chief executive Pete Redfern told The Scotsman that while volumes had picked up in July and August it was too early to say that the current slump had reached its nadir.
Redfern said: "We did see a very, very weak market in the second quarter and that may turn out to be the bottom in terms of sales rates and confidence
"But I don't think we've seen the full extent of how the market is going to react in terms of price and its impact on construction and related industries."
In July the company predicted that average house prices could fall by as much as a quarter before recovering. Redfern yesterday said the company's views had not changed.
Taylor Wimpey has a major business in the United States, which Redfern said was showing signs of "stabilising", though he was unwilling to predict an upturn in the short term, and said there would be no substantial recovery until at least 2009.
While the company said it remained within the terms of its debt covenants, it admitted it was likely to breach its interest cover covenants before the end of the financial year.
Chairman Norman Askew said the company was engaged in "constructive dialogue" with the banks, and the group was confident it could secure new terms before the end of the year.
Redfern said an improvement in mortgage availability would be essential before the market returned to normal, and reduced transaction costs would help.
"I think time is the single biggest factor (towards a recovery]. Stability comes as confidence returns and that always takes time," he said.
Mark Hughes at Panmure Gordon said the results were below the City's expectations and the major positive that could have been announced today – refinancing – had not materialised.
"Whilst the group comments that it believes negotiations with lenders will reach a satisfactory conclusion by the year-end, there is no conclusion yet," Hughes said.
Shares in Taylor Wimpey ended the day down 3.75p or 7.2 per cent at 48.25p.
The full article contains 435 words and appears in The Scotsman newspaper.
