Taylor Wimpey, the U.K.-based parent company of Taylor Morrison in the U.S., booked a £1.5 billion--or $2.7 billion--loss for the first half of 2008 as the British home market's meltdown accelerated.
The majority of that loss was a £816.1 million--or $2.5 billion--write down of George Wimpey's goodwill and brand because of the weak trading conditions in the company's stock, which sunk from a 52-week high of 367p to a low of 22.50p in July on the London Stock Exchange. At market close Thursday, the stock sat at 53.25p.
The other portion of the company's major posted loss--£690 million pounds, or $1.3 billion--was attributed to valuation write downs and reduction of prices to move homes. The U.S. write downs, primarily on Taylor Morrison's California assets, totaled £70.8 million pounds, or $129.7 million. The company also wrote down £33.3 million related to its Spanish business.
In an effort to spin such a massive loss positively, Taylor Wimpey's CEO Peter Redfern said that, thanks to its North American business, it has been able to adjust more quickly to the U.K. market fall.
"Our experience of the downturn in the U.S. housing market has enabled us to recognize the early signs of market weakness in the U.K. and act swiftly to position our U.K. housing business for a difficult trading environment," Redfern said in a prepared statement. "Whilst conditions are likely to remain tough in both the U.K. and the U.S. in the short term, we are maintaining momentum in the U.K., and we have seen pockets of stabilization in the U.S. We believe that both markets continue to be attractive on a longer-term view."
In support of his statement that the U.S. market is stabilizing for the company, Redfern said Taylor Woodrow has been able to reduce its number of completed unsold homes to 364 from 908 in the first six months of the year.
Because Taylor Wimpey was created by the merger of Taylor Woodrow and George Wimpey in July of last year, year-to-year comparisons of earnings and sales are difficult. However, Redfern said he is confident that the merger has helped the company's bottom line by creating synergy savings of £70 million by year's end.