More on Wimpey
Wimpey
House builder Wimpey reported turnover growth of 4% (to £3,005m) and operating profit growth of 16% (to £500.7m). Wimpey has reported increased visitor levels and interest in the UK market, a statement that has sparked some interest in the sector. Wimpey expects the US market to be strong next year. It is geographically well diversified by sector standards with operations well spread out over the UK and a US business which generates c16% of operating profits.
The US market, which contributed a 16.5% of operating profits in the first half performed well, despite the affects of the hurricane. In sterling terms turnover grew 16% to reach £705m for the year and operating profits grew 42% to reach £102.7m. Completions were up 21%, a surprise as Wimpey had previously expected a slower growth in volumes.
Costs have been kept under control, partly due to the presence of cheap labour from the EU and Eastern Europe and the gross profit margin has increased to 22% from 20% last year. Administrative expenses have remained at the same level as lats year. The interest charge at £49.7m was slightly down on 2003 (£51.6m).
Wimpey has a gearing of 36%, an improvement from the 45% as in 2003 but it does leave it exposed to should interest rates rise further. Interest cover is comfortable at 10x.
Trading at 448.25p, Wimpey looks relatively cheap on a 2005 prospective PE of 5.8, with a yield of 3.9%.
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