Housebuilder results ahead of expectations as it turns rounds 2009 loss of £96m

Housebuilder Taylor Wimpey returned to profit in 2010 even though it completed fewer homes than in 2009.

It made a £75.1m profit in 2010, compared to a £96.1m loss in 2009.

The Group completed 14,272 homes, almost a thousand fewer than in 2009 (15,166). Taylor Wimpey said it was concentrating on its margins rather than revenue growth to increase profits.

“We remain focused on prioritising margin ahead of volume growth and, although home completions fell in both the UK and North America, this was offset by growth in average selling prices,” it said.

It was hit by £146.4m in exceptional items, however, from refinancing its huge debt pile last December. This included £83.4 million went on interest breakage charges, and the group also spent £31.7 million in professional fees.

Taylor Wimpey also said it was “evaluating proposals for our North American business”.

Like many housebuilders, Taylor Wimpey said it was concerned with the government’s localism agenda, which it says will threaten approvals for new houses.

“There remains a significant likelihood that there will be an unintended reduction in the supply of new homes during the transition to the new regulations as planning authorities get to grips with the changing guidance,” it said.

The housebuilder told the City on 16 November that it had agreed a £950m credit facility with banks to cover a £720m debt mountain, but that it was dependent on finding a further £350m from the private or public money markets.

Post the refinancing last year, Taylor Wimpey has reduced the interest it pays on its debt pile and during the last year it reduced its net debt from £751m in 2009, to £654m at the end of December.

While there was no update on the potential sale of its US and Canadian businesses, which could be finalised in the next couple of weeks, the potential proceeds, thought to be around £600m, will vurtually wipe out the firm’s debt.

Commenting on today’s results, JP Morgan analyst Emily Biddulph said: “Reporting FY2010 net debt of £654m, down c.£100m YoY, we believe the balance sheet is already becoming less of an issue for investors to concentrate on. Following a North American disposal, in our view, the group would be left extremely well positioned for selective investment in new land.”

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