Housebuilder Taylor Wimpey said yesterday trading conditions had “improved significantly” as it revealed a 67 per cent improvement in its UK order book.
In a further sign of increased buyer confidence, the group added cancellation rates had fallen from 46 per cent in the second half of 2008 to 19 per cent for the first half of this year.
Lower selling prices and a decrease in completions in 2008 meant Taylor Wimpey’s UK arm reported a loss of £7.3 million in the first six months of this year, compared with profits of £63.4 million a year earlier.
However, it said the market had stabilised and that it was able to reduce the number of incentives being offered on new home sales.
It also signalled the end of its Bryant Homes and George Wimpey brands, with all new outlets in the UK to be branded as Taylor Wimpey. The company, which also has operations in the United States and Spain, was created from the merger of the former Solihull-based Taylor Woodrow and George Wimpey in 2007.
The group, now based at High Wycombe, spent much of the last year in a battle for survival – leaving its shares at just over 3p at one point – before a refinancing deal in April gave it bank facilities totalling £2.47 billion. A £510 million cash call on shareholders also cut back debt to £1 billion.
Taylor also slashed the number of new building sites as it looked to focus on cash generation and the restoration of its balance sheet.
Chief executive Pete Redfern said the company’s primary objective was now on creating value from existing and future sites.
He added: “The last two years have been incredibly challenging for all housebuilders. However with significant underlying improvements in our business and encouraging signs of stability in the UK and North America, the group is well positioned for the future.”
Across the group, underlying losses widened to £68.9 million from £300,000 a year earlier, but fewer exceptional items meant bottom-line losses narrowed to £681.9 million from £1.42 billion in 2008. The one-off items mainly stem from write-downs on land valuations.
The company said yesterday: “In the first half of 2009, trading conditions improved significantly. We saw stable conditions in the UK, achieving increased sales rates and stable pricing.
“Following extensive restructuring, Taylor Wimpey is well positioned to capitalise on the improved conditions in its main markets.
Analysts said the valuation write-downs of £600 million were around 20 per cent larger than expected, but trading was good on an underlying basis.
Keith Bowman, equity analyst at Hargreaves Lansdown stockbrokers, added: “While management is expressing hopes that the worst of the housing shakeout is now over, nagging doubts over the impact of both expected government spending cuts and likely tax increases on the behaviour of consumers remain.”
The company said it completed 4,702 homes in the UK at an average selling price of £153,000 in the half year.