Taylor Wimpey profits add to construction recovery

By This Is Money
Updated: 05:12 EDT, 3 March 2011

Taylor Wimpey announced a return to the black but remains cautious amid pressure on mortgage lending.

New tack: Maximising margins rather than volume growth

Pre-tax profits were £75.1m in 2010 against losses of £96.1m the previous year, the housebuilder having shifted its focus onto maximising the value of each home sold.

It said it had been encouraged by sales rates and prices so far this year but constrained mortgage lending and the continued economic uncertainty are keeping the group firmly on its toes.

It will stick to its strategy of maximising margins rather than volume growth and said it was on track to achieve its target of double-digit operating margins from its UK business in 2012.

The UK operating margin jumped to 7.1% in 2010, from 1.7% in 2009.

The year also saw Taylor agree new lending terms with its banks in a move that has removed a number of operational restrictions. It has also begun the process of selling its North American housebuilding division.

The UK business completed a total of 9,962 homes last year, down from 10,186 in 2009 but with an average selling price 7% higher at £171,000.

It said it would continue to work with the mortgage industry to identify ways of increasing mortgage supply, such as its recently launched Take 5 product that uses an insurance-backed guarantee to provide a 95% mortgage.