More on Wimpey
Wimpey: H1 Trading statement
George Wimpey, the housebuilder, warned that profits for the first half of the year to June 2005 would be below last year, despite a strong performance from its American business. Higher interest costs and lower volumes and margins in the UK were the main reasons for the decline in profits.
The company said the UK housing market “has remained steady at a level well below the very strong first few months of last year”. Sales rates in the first half of the year have been down around 17.5% compared to last year, despite a 10% increase in the number of sales outlets and a higher level of sales incentives offered. Completions are down 10%, although the company hopes to end the year with a similar level of completions to last year.
Higher sales incentives and increased costs (due to higher materials prices) are squeezing margins. Gross margins for the first half will be around 2.5% lower than in the same period in 2004.
The weaker market is also reflected in the order book: 2005 total order book is 7% lower by volume and 12% lower by value, although the extent of the decline is hidden by higher orders for social housing. The private development order book is 19% lower by volume and value.
The sole piece of good news is that the US housing market is robust and the company’s subsidiary in that country is performing well.
The share trades at 436.5p, on a prospective PE of 5.6x (2006 earnings) with a yield of 4.4%.
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