Taylor Wimpey reaps rewards of refocus

HOUSEBUILDER Taylor Wimpey swung back into profit yesterday after its focus on more expensive homes over sales growth helped to boost half-year results.

Higher average house prices meant that margins were ahead of expectations and the group said it could ride out any further slowdown in the recovery of the UK housing market.

Chief executive Pete Redfern said the business was in a stable position after reporting lower net debt and a healthy order book. "We feel we're in pretty good shape to weather things if they're slower in the second half …but we're not ignoring the potential risks," he added.

North of the Border, Taylor Wimpey has 30-odd developments and employs more than 200 staff, excluding contractors.

The group recorded a pre-tax profit, before exceptional items, of 19.6 million, ahead of analysts' expectations. This compared with a loss of 68.9m in the same period last year, when it was forced to write down the value of work in progress by more than 500m. After exceptional items, its profit reduced for the six months to 7.5m.

House price growth has stalled in recent months, despite the economy growing strongly in the second quarter. House prices dipped 0.6 per cent in June, the third successive monthly fall, according to mortgage lender Halifax, and further house price falls look likely into 2011.

Weaker prices would hit margins for the housebuilders, reversing the gains that they have made in recent months.

But Taylor Wimpey's average selling price rose by 9.8 per cent to 168,000, with changes in the type of properties sold helping to improve the figure.

Revenues for the division increased 11.1 per cent to 827.1m after it completed a total of 4,804 homes in the first half, a slight increase on a year earlier.