Taylor Wimpey swings to £260 million 2010 FY profit from a £640 million loss in 2009

Taylor Wimpey swings to 260 million 2010 FY profit from a 640 million loss in 2009

Taylor Wimpey Plc, the U.K.'s second-largest homebuilder by volume, swung to a 2010 profit after the company sold its UK homes at higher prices.

Net profit was 259.3 million compared with a loss of 640.4 million a year earlier, the company said today in a statement. Revenue was little changed at 2.6 billion, but the average selling price of its homes rose 6.9% to 171,000, which raised it's margin in the UK from 0.8% to 7.1%.

Recent data shows a mixed picture of the U.K. housing market as a lack of supply supports values while fading consumer confidence and weak lending stifle demand. February home prices unexpectedly rose 0.3% to 161,183 from January, a report by Nationwide Building Society showed this week. The market for new homes is expected by TW to remain flat throughout the year, and TW has been able to put through some price increases.

TW has recently launched it's 'Take 5' mortgage product that uses an insurance-backed guarantee to provide an affordable 95% mortgage, to help customers.

TW has been active in the land market during the year, offering on a total of 8,713 new plots on 86 new sites with limited use of deferred payment terms (2009: 3,003 plots on 22 sites). TW UK short term land portfolio, representing owned or controlled land with planning, or a resolution to grant planning, stood at 63,556 plots at 31 December 2010 (2009: 66,089 plots). The average cost per plot in the land portfolio was 31k at 31 December 2010 on the basis of allocating all net realisable value provisions against land value (2009: 30k).

TW is carrying around half the debt this year at 667.5 million compared to 1.245 billion in 2009, reflecting it's 2009 equity issue and cash generation in the business, which reduced gearing to 35.9%, as net assets rose to 1.8 billion from 1.5 billion. It refinanced it's debt with it's banking consortium last year agreeing a 950 million credit facility in November (350 million of this facility matures in July 2012, with the remaining 600 million maturing in November 2014) and a further 350 million in senior notes. This resulted in a reduced blended interest rate of around 7.5% ( compared to 11% in early 2010) based on average borrowings and current LIBOR levels, so whilst still high compared to it's peers TW is more competitive.

Chief Executive Officer Peter Redfern said in the statement:

"The significant improvement in our performance during 2010 reflects our disciplined focus on margin ahead of volume growth. We have continued to improve the quality of our landbank and add value to our existing sites through replans and operational efficiency. We now have the financing in place to enable us to continue that progress towards our aim of achieving double digit margins in 2012."

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