Taylor Wimpey restores dividend
Housebuilder Taylor Wimpey said it had resumed paying a dividend as its tactic of focussing on margins rather than volume helped enable a swing back to profit.
The company reported an underlying pretax profit of £90m in the 12 months to end-December, compared to a loss of 28 million pounds in 2010, on continuing operations after the sale of its North American business during the year.
“Our performance is the result of a continued focus on driving value by prioritising a further improvement in margins and return on capital,” chief executive Pete Redfern said in a statement.
“While wider economic conditions remain uncertain, the UK has seen a period of continued stability in the underlying housing market and strong growth across a number of areas as shown by our order book.”
Taylor Wimpey’s order book ended 2011 up 17 per cent at £835m, while its operating margin hit 10 per cent in the second half of the year, ahead of its scheduled goal of a double digit margin in 2012.
Britain’s second largest housebuilder by volume said the first weeks of 2012 had mirrored the positive environment of the second half of 2011, with strong visitor numbers and reservations.
The sale of the North American business had improved its financial position, the company said, allowing it to reduce its debt to £117m from £655m in 2010, and resume paying a dividend, proposing a final dividend of 38 pence per share.
Many housebuilders have profited while the property market stagnates by acquiring cheaper development land and selling more houses rather than cheaper apartments, particularly in the prosperous south of England, to boost their margins.
Several British builders, including Persimmon and Bovis Homes have reported large jumps in profit this month, in a sign that housebuilders’ high margin strategy is paying off.