Unlike many large U.S. home builders, the recently merged Taylor Morrison Home, along with its Canadian counterpart Monarch Homes, ended last year with a profit to post on its books.
The North American division, created last summer by the merger of the two British-based builders, George Wimpey and Taylor Woodrow, reported a profit of $124 million in 2007, an 81% drop from $670 million it made in 2006.
No doubt helped by its Canadian presence, where demand has not fallen as it has in the United States, the company sold 6,740 houses last year, a drop of more than 28% from the 8,839 houses it sold in 2006. Moving those homes had a cost. Margins were down to 5.1% from 17.5% the year before. And average sales price fell 13.4%, from $404,000 to $350.
The company reduced its spec. home inventory by 29% and dropped its total lot count from 50,090 to 40,603, a 19% reduction. And, while the company says it isn't ready to buy any more land right now, it isn't necessarily selling what it owns either, choosing to mothball communities that it feels will be valuable in future years.
The savings from the merger are being realized, the company said, with an estimated $40 million in savings expected by the end of 2009.
"While the U.S. market continues to be challenging, our objectives will allow us to be ready to move forward with plans for growth at the right time," Sheryl Palmer, Taylor Morrison's president and CEO said in a release.
"In North America, following the merger, we are better positioned to navigate the ongoing challenges" Taylor Wimpey CEO Peter Redfern said in a Taylor Wimpey news release Thursday. "In the short term, our strategy remains to focus on realizing cash from existing sites, reducing the cost base, and maintaining a steady sales pace. Whilst it remains too early to make significant land purchases, we are well placed to take advantage of any high quality land acquisition opportunities that arise as a result of the prolonged market weakness."