Builder Taylor Wimpey back in black as it reins in costs

Published on Tuesday 2 August 2011 23:03

TIGHTER cost controls helped housebuilder Taylor Wimpey to return to profit during the first half of the year despite the firm selling fewer homes, figures yesterday revealed.

The group, which also trades under the George Wimpey and Bryant Homes brands, revealed its average selling price was flat at 168,000 and that it sold 4,707 houses against 4,804 a year earlier.

Taylor has 34 housing developments on the go in Scotland, with about 210 of its 3,000 staff based north of the Border.

Chief executive Pete Redfern said consumer confidence in the housing market was good, despite the economic conditions, but problems getting mortgages were still holding back potential buyers. Trading in July was better than expected as the company geared up for its key selling season over the autumn.

Profits in the six months to 30 June were 28.9 million against a loss of 2.3m a year earlier, on revenues 3 per cent lower at 817.8m. The figures exclude the North American businesses, which were sold last month for 730m.

That sale has helped to cut borrowings to 160m compared with 2 billion three years ago, but Redfern said the firm will be cautious with its spending plans.

Ruling out acquisitions, he said now was not the time for "big bets", but added the group would continue to add to its land bank if good opportunities arise. Taylor has one of the largest land banks in the industry with 142,000 plots, of which 64,000 have planning permission.

Orders at the end of July were worth 989m, just below last year's equivalent figure.

Spain remains a problem, with a loss of 1.1m in the first six months as the number of houses sold dropped from 83 to 30, though Taylor says it remains committed to the market for the long term.

The group did not pay an interim dividend, but will review this position at the end of the year depending on how much it is spending on land.

Jonathan Jackson, head of equities, Killik & Co, said: "The group has made further progress towards its target of delivering a double-digit operating margin, reporting a 9.3 per cent margin for the first half. Management intends to continue improving margins through the increased use of strategic land and managing build costs."

William Jones, an analyst at house broker RBS Equities, said: "The results appear to come from the combination of several factors: some price benefit in early 2011, mainly new site linked; early completion of the targeted 10 per cent build cost savings; the higher margin associated with new site openings; and a step-up in the general prioritisation of value over volume."

Taylor Wimpey's interim results came a day after figures from the Chartered Institute of Purchase & Supply showed that the UK's construction sector had continued to grow in July, with builders' optimism hitting a six-month high.