Profit boost from Taylor Wimpey for builders

Taylor Wimpey offered some rare cheer from the housebuilding sector yesterday by revealing it expected full-year profits at the upper end of expectations.

The group said trading had been stable against a backdrop of economic uncertainty, with UK sales over the summer slightly ahead of hopes but the autumn marginally below as customers awaited news on government spending cuts.

Taylor Wimpey has seen an improvement in sales since the announcement but mortgage availability remains a constraint on industry volumes.

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Shares rose strongly in early trade before falling back to close down 0.13p at 24.8p.

The company also announced progress in discussions with banks after agreeing the terms of a revised 950 million credit facility and a new set of covenants.

The second stage of the refinancing process has still to be completed but Taylor Wimpey said it expected the task to be finished by the end of the first quarter of next year.

It added: "We expect to enter 2011 with a solid order book and we remain focused on our strategy of maximising margins and returns rather than looking to accelerate volume growth.

The housebuilder said reservation rates in the UK averaged 0.47 per site per week in the second half of 2010, compared with 0.58 in the first half and 0.48 in the same period a year earlier.

Cancellation rates are broadly in line with the 16 per cent experienced in the first half, while average selling prices on reservations have been broadly flat since the half year. It noted that it had not seen the marked swings recorded by some of the national house price indices.