A substantial jump in orders, a dip in cancellations, and a restructured debt situation has Taylor Wimpey, the U.K.-based holding company for U.S. builder Taylor Morrison, cautiously optimistic that a market turnaround is on its way--if not already here--and confident that the company will be positioned to profit from it.
That said, the Taylor Wimpey's U.K. markets, which started falling after the U.S. housing market, appears to be recovering faster than its North American operations. Before its annual meeting on Friday, June 19, Taylor Wimpey reported a 73% increase in its total sales orders since the first of 2009, up to £971 million from £562 million in Great Britain. Those sales area expected to come at a slight loss, but close enough to break-even to have Taylor Wimpey considering increasing prices and looking for potential land deals in the land-constrained U.K. market.
The improvement in orders in Taylor Wimpey's North American market since January 1, 2009, was much smaller. Orders increased just shy of 19%, to $846 million, and came more recently than the U.K. improvement. However, North American home sales are more likely to be profitable than houses sold in the U.K., according to CEO Peter Redfern, who added that boost is not just because Canada has seen less of a downturn than the United States. (The Canadian housing market has slowed recently as American markets have picked up.)
“This feels like there is a broader base of stability than we could have put our hands on a few weeks ago," Redfern said.
Since the end of 2008 Taylor Wimpey has successfully shed itself of net debt from £1.68 billion to £1.01 billion through tedious renegotiations with its bondholders. It has also successfully raised £510 million through issuing new equity.
“We plan to have debt below the £900-level by the end of the year,” said Redfern. Those gains are expected to come through greater building efficiencies and other across the board measures to keep costs down.
“We are cautious going forward,” said Redfern. “But each coming week makes us more confident.”
Taylor Morrison was created in July 2007 from the merger of George Wimpey and Taylor Woodrow. The pairing created the largest builder in Great Britain and merged George Wimpey’s Morrison Homes in the United States with Taylor Woodrow to create Taylor Morrison. In Canada, the company operates under the Monarch brand.
Teresa Burney is a senior editor for BIG BUILDER and BUILDER magazines.
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