Market Watch: Builders break through property market gloom

Two of the UK's biggest housebuilders, Taylor Wimpey and Persimmon, are due to shrug off the gloom surrounding the property market when they report significant increases in profits.

Both housebuilders have provided bullish trading updates in recent months and are expected to report strong performances in the second half of 2010 despite the UK government's comprehensive spending review in the autumn, which deterred buyers, and the snow in December, which disrupted sales and building work.

Rivals Barratt Developments and Redrow have both posted upbeat results in recent weeks after they built more family homes rather than flats to reduce their exposure to first-time buyers struggling to get mortgages.

Taylor Wimpey is forecast to post pre-exceptional pre-tax profits of 51.2 million in 2010 on Thursday, compared with losses of 96.1m the previous year, as it cuts costs in the UK and sees strong sales growth in the US. Revenues are expected to be flat at 2.6 billion.

Taylor - which trades as Bryant Homes, Laing Homes and George Wimpey - returned to profit in its half-year results as it focused on margins rather than sales growth and its average sale price increased by 10 per cent as it built fewer flats.

Meanwhile, Persimmon is expected to report on Tuesday pre-exceptional pre-tax profits of 88m, up from 7m in the previous year.

In January, it said it had achieved a significant increase in underlying profits for 2010 after turnover lifted by 10 per cent to around 1.6bn.

This followed the completion of 9,384 sales in the year at an average price of 167,000, itself an improvement of 6 per cent.

The housebuilder has doubled its margin to 8 per cent over the past year, helped by building more family-sized homes and fewer apartments.

Insurance giant Aviva is expected to make further progress on the back of strong recent sales growth, while profits should also benefit from the group's ongoing efficiency measures on Wednesday.

The City expects the company to report operating profits of between 2.2bn and 2.4bn in 2010, compared with 2bn last year.

When Aviva last updated the market, with its third-quarter results, it reported a 26 per cent increase in sales to 2.4bn.

The sales trend improved in the third quarter and pushed the rate for the first nine months of the year up to 16 per cent at 12.3bn, while worldwide new business rose 5 per cent.

The market will be on the lookout for news of the group's plans to reduce its expenditure. Aviva has earmarked 200m of efficiency savings and 200m of cost savings by the end of 2012, of which half will come from the UK.

This comes after the life and pensions arm saved 500m between 2007 and 2009 in a move that saw it reduce its headcount by 19 per cent.

Aviva - which knocked back a 5bn offer from More Than parent RSA to buy its home and motor insurance operations in the UK, Canada and Ireland in the summer - also announced plans in April to shut the UK final salary pension scheme to future accruals, which will save it 50m in funding costs.

Chief executive Andrew Moss said in November that Aviva was on track for "strong profitable growth" for the full year.

Admiral Group's growing share of the car insurance market should help it to unveil an increase in profits on Wednesday.

Pre-tax profits at Admiral, which owns Diamond and Elephant, are forecast to have risen 20 per cent to 259m in 2010.

Admiral increased the number of cars in the UK on its books by 23 per cent in the first half of the year, despite premium rates increasing by 22 per cent.

Analysts said Admiral put up prices by less than many of its competitors, some of which are making losses and cannot afford to chase volume.

The third quarter saw the rate of new cars it insured increase to 28 per cent, bringing the total to 2.6 million, and analysts at UBS predict a further increase in sales in the final quarter of the year.