Taylor Wimpey Plc, the UK's second largest housebuilder by market value, today said it's well positioned to increase its profits as conditions in its main markets improve slowly, although it remains cautious.
The company said restrictions on mortgage availability, whilst still having an impact on customers' ability to fund new home purchases, are gradually easing and that trading in the U.K. has continued to be encouraging during the first two months of the year. Unlike it's peers TW does not appear to have improved margins in the upturn, which are 0.8%, compared to 2.8% last year and industry norms of 5-6%.
The company booked a full-year pretax loss before exceptional items of £96.1 million, after a loss of £74.7 million in 2008, while revenue fell to £2.59 billion from £3.46 billion. But its bottom line was further hit by exceptional items of £603.8 million, which include land and work-in-progress write-downs, and resulted in a loss for the period of £640.6 million, which was in line wth expectations.
During the year, Taylor Wimpey completed 10,186 homes in the U.K. at an average selling price of £160,000, 4,755 homes in North America at an average selling price of £171,000 and 225 homes in Spain and Gibraltar at an average selling price of £260,000.
In the UK, TW has approved new land investments of c4,000 new plots since mid-2009, which will deliver completions at or above normal industry margins and accelerate the business's return to full profitability.
Pete Redfern, Group Chief Executive, said:
"Trading conditions for our main businesses stabilised through 2009 and we were pleased to return to operating profit in both the UK and North America in the second half of the year. Whilst we remain cautious, we are continuing to see slowly improving conditions across our main markets. Our active cost reduction, high quality landbank and strong order book position us well to increase profitability as markets recover."
Taylor Wimpey, like rival house builders, has been struggling in the past two years with one of the worst housing market slumps in decades as the lack of credit stifled demand. But Taylor Wimpey also faced £1.5 billion in debt and refinancing issues in the midst of the credit crunch, which led to a £530 million rights issue and expensive debt arrangements.
It has now reduced its debt to £750.9 million from £1.53 billion, helped by £510 million proceeds from it's cash call and £702 million of cash generation from trading.
Taylor Wimpey shares closed yesterday at 38 pence, giving the company a market capitalization of £1.15 billion.
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