Calling the U.S. home-building market "extremely challenging" Taylor Wimpey, the United Kingdom-based parent company to the U.S.-based Taylor Morrison, said it expects to impair the value of its North American land by 15% for 2007, the company reported in its preliminary results release this week.
Other data released by the company, which builds homes in North America under the Taylor Morrison name in the United States and Monarch in Canada, shows the company has been beset with the same problems other U.S. builders are facing. But the company's Canadian operations, which have not experienced the same slowdown as in the United States, are helping to bolster the results some.
Taylor Woodrow and Monarch finished 6,740 houses last year compared to 8,839 the year before, nearly a 24% reduction. And those homes were discounted to move. The average sales price fell almost 19% from $418,573 to $339,597.
Interestingly, the value of the company's North American operations backlog has fallen only 3.6% from last year, down to $1.04 billion from $1.08 billion in 2006.
The company's North American land bank was reduced 18 percent from 50,090 lots to 40,789. The company is looking to boost its and holdings in Canada, but the U.S. plans are different. "We remain cautious with regard to purchasing land in the United States."
The July merger between two of the biggest U.K.-based builders, Taylor Woodrow and George Wimpey, has gained the company operational savings, the company reported. Operating margins are expected to be up two points from the 12.5% margins in 2006.
"We remain on course to deliver on previously stated synergy run rate targets of 70 million pounds by the end of 2008 and 100 million pounds in aggregate by the end of 2009," it said.
An earlier version of this story misidentified Taylor Wimpy's U.S. subsidiary, Taylor Morrison. Big Builder Online regrets the error.