Housebuilder posts £19.5m loss due to US sub-prime crisis
Taylor Wimpey has seen its annual profit plunge into the red after the US sub-prime crisis forced it to write-down the value of its North American business by £283.4m.
The UK’s second-largest housebuilder this morning posted a pre-tax loss for the 12 months to 31 December 2007 of £19.5m. This was a dramatic fall from the previous year when the newly-formed group posted an adjusted pre-tax profit in 2006 of £405.6m.
The results were the first since last year’s merger between George Wimpey and Taylor Woodrow and saw turnover for the company fall to £5.88bn from £6.72bn as its overall housing completions slipped from 31,128 to 27,642.
Despite this slip in housing completions being mirrored in the UK where they fell from 21,910 in 2006 to 20,690, Taylor Wimpey grew its UK operating margins from 12.8 % to 15.2%.
However the UK business also saw its order book as a percentage of its revenue fall to 26% from 31% in 2006.
The company’s share price was up by 3% in early trading but had fallen back by 1pm to show no change at 165.3p, valuing the company at £1.74bn. This is some way off the 384p-value that the company has touched in the last year.
However, Taylor Wimpey’s chairman Norman Askew said he was confident in the business.
Referring to the 2007 merger of Taylor Woodrow and George Wimpey, he said: “'The rapid progress we have made in delivering an integrated Taylor Wimpey and the confidence we have in the business is underlined by the proposed 6.8% increase in the total dividend for the year.”
More cautiously, chief executive Peter Redfern commented: “We continue to anticipate a more difficult trading environment in the UK during 2008. However, we have actively positioned the business for more challenging conditions and are well placed for the future.”