Strong performance in USA fails to mask housebuilder's weak overall results as UK profit slumps to £278m

George Wimpey this week announced the retirement of group chief executive Peter Johnson and a sharp fall in profit at the UK business.

The volume housebuilder said Johnson, who has been chief executive for five years, would be replaced by UK head Peter Redfern on 1 July.

Johnson said it was the right time to leave because he had achieved his aim of putting a "dismal, old-fashioned business" into a good shape. He added that at the age of 59 it was a good time to plan ahead, although he had no immediate plans.

Redfern takes over at a tough time. On Tuesday, Wimpey said operating profit at its UK business had fallen 32% to £278m in the year to 31 December.

A strong performance from Morrison Homes, Wimpey's US subsidiary, was not enough to cancel this out, and group profit dropped 12% to £437m.

Despite the poor results, shares in the company rose 6.5p, or 1%, to 552p when the results were announced. This was partly because Wimpey had warned the market in January that 2005 had been a difficult year. Some in the City said the price rise could also be explained by persistent merger speculation.

A merger with Taylor Woodrow is considered to be most likely because the firms each have a complementary US business.

Johnson denied a deal was on the cards, saying: "I've said for a while that growth is focused on organic development and I've heard Peter Redfern say the same."

Johnson said Wimpey had suffered from its relatively limited landbank. He said: "For this reason in 2005 as house prices stabilised the rising cost of land affected us quickly, having a 3% impact on our margin."

Wimpey is following the example of Redrow by building cheaper homes for first-time buyers. Its one-bedroom flats in Tipton, West Midlands, will cost about £65,000.

Johnson said Wimpey would stop investing in high-rise city centre schemes.