Wimpey's profits decline by 16% |
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Published
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Wed, 22 Feb 2006 13:50
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LONDON: British housebuilder George Wimpey Plc. has posted a 16 per cent decline in its underlying profits, in line with its forecast. It, however, said Tuesday there are encouraging signs of recovery in the housing market in the U.K. now.
The company said its profits before tax fell to 366.5 million pounds from 437.6 million pounds. This has been mainly on account of sales promotions in the U.K. where housing market had been in doldrums. The company's revenue was up by a modest 30 million pounds to 3 billion pounds.
The company said its operations in the United States, which accounts for nearly 30 per cent of the group sales, had helped it to contain a steep 32 per cent drop in the U.K. operating profit. However, the company said the U.S. market is now slowing though its order book has remained strong.
Wimpey said its chief executive Peter Johnson will retire on 30 June. Current U.K. chief executive Peter Redfern will take over from Johnson.
The company said average selling price in the U.K. had dropped 4 per cent, basically due to a change in the product mix, which now includes affordable homes. On the contrary, prices rose 8 per cent in the U.S. markets.
The company's margins in the U.K. market fell to 12.9 per cent from 18 per cent. But the company is positive about U.K. and its order book has risen by 30 per cent by volume and 22 per cent by value in the first seven weeks of 2006, it said.
However, it said the U.S. market, where prices had gone up 55 per cent in 2005, appears to be slowing. Nevertheless, its U.S. operations,
Morrison Homes, started 2006 with a strong forward sales position.
Johnson said the company had taken measures to improve performance, including a cost-cutting programme. The company is targeting to save 20 million pounds from cost cuts, of which 18 million pounds have been achieved in 2005, he said. The remaining 2 million pounds will be taken out of its cost bases early this year.
Wimpey has been a takeover target and rivals Taylor Woodrow and Barratt Development are said to be eyeing it.
The company has proposed a final dividend of 17.6 pence per share, up10 per cent from last year.
Shares of the company were up 0.5 per cent at 547-3/4 pence, valuing the group at around 2.2 billion pounds.
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