Taylor Wimpey Plc (TW/), the U.K.’s second- largest homebuilder by volume, more than doubled first-half earnings as it sold more expensive homes at higher margins.
Pretax profit before one-time items rose to 78.2 million pounds ($123 million) in the six months ended July 1 from 28.9 million pounds a year earlier, the High Wycombe, England-based company said today in a statement. Analysts expected 71.6 million pounds, according to the average of three estimates compiled by Bloomberg.
Chief Executive Officer Pete Redfern focused sales on more expensive family residences in more affluent southern England as the company developed low-cost land bought after values slumped in 2009. Redfern is “pretty confident” of achieving the 211 million-pound operating profit that analysts estimate for the full year after margins increased, he said today on a conference call with journalists.
Revenue rose 11 percent to 906.2 million pounds as the average price increased 4.7 percent. The company increased its first-half operating margin by 2.9 percentage points from a year earlier as home completions climbed by 8 percent.
“There’s more to come in the next 12 to 18 months,” Redfern said.
Taylor Wimpey advanced 0.9 pence, or 2.1 percent, to 45.07 pence at 9:15 a.m. in London. The stock was the worst performer among the 10 members of the Bloomberg U.K. Homebuilder Index (BNUKHBLD) in the three months through yesterday. The shares dropped almost 13 percent compared with an average decline of 1.7 percent.
“These are a good set of results,” said Rachael Applegate, an analyst at Panmure Gordon & Co. with a buy rating on the shares. “They have traded well and they are getting good margins out of the business.”
Net assets appreciated by a penny from a year earlier to 58 pence a share. The company will pay a first-half dividend 0.19 pence a share, after not distributing any money to investors a year earlier.
Lender Nationwide Building Society reported today that U.K. home prices fell 2.6 percent in July from a year earlier, the largest annual decline in three years, as Britain’s recession deepened. The Bank of England reported yesterday that mortgage lending dropped to an 18-month low in June.
“Everything we see on the ground is very, very stable,” Redfern said, adding that since 2009 the number of homes sold and prices “have barely moved.”
Net income was 130.3 million pounds, or 4 pence a share, compared with a year-earlier loss of 4.2 million pounds, or 0.1 pence. This was bolstered by a canceled tax provision of 59.6 million pounds and a 22.4 million-pound interest-related gain following a tax ruling in Taylor Wimpey’s favor.
To contact the reporter on this story: Simon Packard in London at firstname.lastname@example.org.