HOUSEBUILDER Taylor Wimpey swung back into profit over the first half of the year, helped by an improving outlook for the property sector and a determined cost cutting drive.
Taylor Wimpey, the second largest homebuilder by volume in the UK, posted a pre-tax profit for the six months to 4 July of £19.6m. That compared to a pre-tax loss of £681.9m in 2009 when it was forced to write down the value of work in progress by more than £500m.
While house completions were up only slightly in the first half compared with last year, the average selling price rose by 9.8 per cent to £168,000, up from £153,000.
That, along with a material improvement in operating margins, helped bring Taylor Wimpey back into the black. The company said it reduced build cost during the period by nearly 10 per cent, and the UK order book was up by over £100m from the end of 2009 to £952m.
Chief executive Pete Redfern said: “Although conditions are not normal and mortgage availability is a constraint, we feel we are in good shape.”
Taylor Wimpey’s net debt also fell sharply to £634m from more than £1bn this time last year.
A combination of continued low interest rates and lower unemployment than feared has helped house prices rebound over the year so far. Though tighter lending conditions and falling confidence caused prices to fall in July for the first time in five months, experts said it would be a temporary blip. The Centre for Economics and Business Research said the recovery would continue through until 2014 due to low interest rates and a shortage of supply.