Taylor Wimpey Plc (TW/), the U.K.’s second-largest homebuilder by volume, reported a 2011 profit on increased margins and rising home completions.
Profit on ordinary activities excluding tax was 78.6 million pounds ($125 million) compared with a loss of 154.8 million pounds a year earlier, the London-based company said today in a statement. Net income was 99 million pounds. Analysts expected a figure of 100.3 million pounds, the average of six estimates compiled by Bloomberg.
Homebuilders are widening their profit margins by focusing more on houses and developing land bought after prices fell in the recession that ended in 2009. The U.K. government is trying to spur construction after homebuilding in England and Wales fell in 2010 to the lowest during peacetime since 1924.
“In 2011, we saw significant progress in our operational performance and I am pleased that we have reached our double digit operating margin target ahead of schedule,” Chief Executive Officer Pete Redfern said in the statement.
Revenue climbed to 1.81 billion pounds from 1.77 billion pounds, Taylor Wimpey said. Home completions increased 2.3 percent to 10,289. The group operating margin widened to 8.8 percent from 5 percent a year earlier.
Taylor Wimpey, which planned to achieve a U.K. operating margin of more than 10 percent by 2012, reached that level in the second half of 2011, the company said today. That lifted the full-year margin to 9.7 percent from 6.4 percent in 2010.
Taylor Wimpey sold its U.S. and Canadian divisions for $1.2 billion last year to reduce debt and finance land purchases. Profit including discontinued operations fell to 99 million pounds from 259 million pounds a year earlier after a tax credit in 2010 wasn’t repeated.
U.K. homebuilder stocks have surged this year after companies reported widening margins and Berkeley Group Holdings Plc and Persimmon Plc announced plans to return cash to shareholders over the next 10 years. Persimmon yesterday rose by the most since 2008 after saying it will pay out 1.9 billion pounds to investors.
Taylor Wimpey, which gained 6 percent yesterday, was down 5.6 percent at 49.69 pence in London trading as of the 4:30 p.m. close, giving the company a market value of 1.59 billion pounds.
U.K. homebuilders are taking advantage of government initiatives to boost home loans by helping lower down payments after the financial crisis caused banks to restrict lending. Taylor Wimpey completed 173 homes under the government’s FirstBuy plan in 2011 and it has the capacity to deliver about 1,100 more, the company said today.
To contact the reporter on this story: Chris Spillane in London at email@example.com.