Home builder Taylor Wimpey said Wednesday that it suffered a massive first-half net loss of 1.419 billion pounds because of "challenging" housing markets in Britain, Spain and the United States. Taylor Wimpey, which operates across all three countries, said in an earnings release that deteriorating property sectors had forced it to write down the value of its land.
The net loss, equivalent to 1.8 billion euros or 2.6 billion dollars, was recorded in the six months to the end of June, the group said. That compared with a net profit of 22.7 million pounds in the same period of 2007. Taylor Wimpey also faced a pre-tax loss of 1.542 billion pounds in the first half, which contrasted with a pre-tax profit of 18.3 million last time. Revenue grew 35 percent to 1.89 billion pounds.
"The first half of 2008 has been characterised by the very challenging trading conditions in the UK, US and Spain," said group chairman Norman Askew in comments accompanying the interim earnings statement. Disappointed investors sent the company's share price sliding 6.73 percent to 48.50 pence in morning deals on London's second-tier FTSE 250 index, which was down 0.74 percent at 9,066.00 points.
Taylor Wimpey, like all British housebuilders, is battling a slump in the domestic housing market. The firm said last month that it would axe 900 jobs in Britain in a bid to cut costs. The group had failed in July to secure a refinancing package that would have raised new capital from existing and potential investors.
Taylor Wimpey added Wednesday that it had written off 690 million pounds against land owned in Britain, Spain and the United States, because of falling land prices and slower activity. "The board remains convinced of the fundamental value of the business over the medium and long term and our primary focus is to amend certain of the existing borrowing agreements," Askew added.
"To this end, the group is engaged in constructive dialogue and is not aware of any issues which would prevent these amendments being finalised by the end of this year." Taylor Wimpey was formed last year, on July 3, 2007, through the merger of established house builders Taylor Woodrow and George Wimpey. Britain is currently experiencing a prolonged downturn to its property market amid high inflation and interest rates in the country, as well as slower economic growth and the ongoing impact of the global credit crunch. Many cash-strapped Britons are struggling to borrow money from banks for mortgages because of the credit squeeze which began in August 2007 in the wake of the US subprime home-loans crisis.
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