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Taylor Wimpey hit by massive loss Taylor Wimpey hit by massive loss
(10 minutes later)
Housebuilder Taylor Wimpey has reported a huge loss for the past six months after having to write down the value of assets including land. Housebuilder Taylor Wimpey has reported a huge loss for the past six months after having to sharply reduce the value of its assets including land.
The firm slumped to a loss of £1.54bn in the six months to 30 June, saying it faced "very challenging" conditions.The firm slumped to a loss of £1.54bn in the six months to 30 June, saying it faced "very challenging" conditions.
It was hit by the reduced value of land in the UK, US and Spain and the cost of downsizing its UK business. It was hit by the lower value of its land in the UK, US and Spain, and the cost of downsizing its UK business.
Excluding write-downs of asset values, Taylor Wimpey made a profit of £4.3m, down from £119.8m last year. Excluding these reductions of asset values, Taylor Wimpey made a profit of £4.3m, down from £119.8m last year.
Sagging demandSagging demand
The firm is cutting about 900 jobs in the UK as the squeeze on mortgage finance has severely reduced demand for new homes.The firm is cutting about 900 jobs in the UK as the squeeze on mortgage finance has severely reduced demand for new homes.
Other leading property developers, including Persimmon, Barratt Developments and Bovis Homes, have been forced to streamline their operations in response to the malaise in the market.
The first half of 2008 has been characterised by the very challenging trading conditions in the UK, US and Spain Norman Askew, Taylor Wimpey chairmanThe first half of 2008 has been characterised by the very challenging trading conditions in the UK, US and Spain Norman Askew, Taylor Wimpey chairman
The UK market remained "very challenging", the firm said, with no imminent prospect of recovery. The UK market remained "very challenging", Taylor Wimpey said, with no imminent prospect of recovery.
Profits from its UK business fell 39% over the period.Profits from its UK business fell 39% over the period.
The situation is similarly bleak in the US, where the firm's profits fell by 63% and in Spain, where profits fell 85%.The situation is similarly bleak in the US, where the firm's profits fell by 63% and in Spain, where profits fell 85%.
Tough conditions in all its major markets has forced the firm to write down the value of land its owns by £690m.Tough conditions in all its major markets has forced the firm to write down the value of land its owns by £690m.
It is also writing down the value of other assets, including the George Wimpey brand that it bought last year, to the tune of £816m.It is also writing down the value of other assets, including the George Wimpey brand that it bought last year, to the tune of £816m.
In addition, the firm had restructuring costs of £40m primarily relating to its UK housing business In addition, the firm had restructuring costs of £40m, primarily relating to its UK housing business
"The first half of 2008 has been characterised by the very challenging trading conditions in the UK, US and Spain," said the firm's chairman Norman Askew."The first half of 2008 has been characterised by the very challenging trading conditions in the UK, US and Spain," said the firm's chairman Norman Askew.
But he added: "The board remains convinced of the fundamental value of the business over the medium and the long term."But he added: "The board remains convinced of the fundamental value of the business over the medium and the long term."
However, Taylor Wimpey said it was in discussions with banks and other lenders about amending some of its borrowing agreements. Bank discussions
Taylor Wimpey said it was in discussions with banks and other lenders about amending some of its borrowing agreements.
It has borrowed £1.7bn from the banks and has been seeking to renegotiate terms of the loans.
The firm failed to secure additional financing from its investors earlier this year, leading to a sharp fall in its share price.
However, it stressed that its cash position was strong and it was "fully compliant" with its banking covenants.
"We are focused on giving ourselves the flexibility to navigate through the market downturn and strengthen our position for a market recovery," the firm added.