Taylor Wimpey has posted a massive £1.42bn net loss for the first half of the year.
The UK’s largest homebuilder, created by a £4.3bn merger a year ago, increased revenues by 35% to £1.9bn and even managed pre-tax profits of £4.3m despite the tough market conditions.
However, a huge write-down of land values, restructuring costs and loss of goodwill from the George Wimpey brand left the company firmly in the red and some analysts believe in danger of breaching its banking convenants.
As well as the loss of 900 jobs announced previously, the company’s financial statement said there would be further cost-cutting. “In addition, we continue to work with our suppliers and subcontractors to identify ways to increase efficiency and reduce cost,” the company said.
Of its North American operations, the company said it has “a number of purchasing initiatives under way, which will have a beneficial impact on future build costs”.
UK home completions grew 87% to 6,317 as the impact of the merger with George Wimpey outpaced the deterioration of the housing market. Average selling prices were down to £202,000 from £224,000. The proportion of social housing increased to 24% from 17%.
“The current operating environment in the UK housing market remains very challenging and we do not anticipate any recovery in the short term,” warned the company.
Taylor Wimpey failed to secure a refinancing packaging in July, however, the company said it was in full compliance with borrowing agreements controlling its £1.7bn debt and “constructive discussions are onging”.
