Margin focus boosts Taylor Wimpey profit

HOUSEBUILDER Taylor Wimpey improved its operating margins to post an underlying annual profit ahead of expectations.

Revenues remained flat for the construction firm at £2.6bn in the year to 31 December 2010, whilst the number of homes completed dropped to 14,272 from 15,166 a year earlier.

An increase in average selling prices helped the builder to eke out increased operating margins and pare its losses.

Taylor Wimpey made a pre-tax loss of £71.3m including exceptional items of £146.4m, compared with a loss of £96.1m a year earlier.

Discarding the exceptional items, the group hit profits of £75.1m, well above analysts’ predictions.

Market expectations had ranged between £24.1m and £70m.

The construction group said it now held a net debt of £654.5m, slashed from £750.9m a year earlier.

The builder is in the process of selling its Taylor Morrison operations in North America in order to pay down debt and focus on its domestic market.

Potential buyers for the unit include Canada’s biggest builder Mattamy Homes and US firm Meritage Homes.

A sale could net Taylor Wimpey up to £620m.

For the year ahead, the builder said it expected volatile market conditions driven by fluctuating house prices, economic uncertainty and restricted mortgage lending. It said it would continue to run the business cautiously.

Group chief executive Pete Redfern said: “The significant improvement in our performance during 2010 reflects our disciplined focus on margin ahead of volume growth.

“We now have the financing in place to enable us to continue that progress towards our aim of achieving double digit margins in 2012.”