Shares in Taylor Wimpey were up on the FTSE 250 in morning trading after the housebuilder reported a return to profit in the full year ended 31 December 2010.
Group revenue increased 0.3 per cent in the period to £2.6 billion, while the group reported a pre-tax profit of £259.3 million, following a pre-tax loss of £640.6 million in the previous year. Before exceptional items the group went from a loss of £96.1 million to a pre-tax profit of £75.1 million.
Net debt was reduced during the year from £750.9 million to £654.5 million. The group also said it had reduced its pension deficit from £406.4 million to £248.5 million.
Taylor Wimpey said that while economic uncertainty was ongoing the underlying market in Great Britain is "expected to remain stable through 2011".
Pete Redfern, Chief Executive of Taylor Wimpey, said, "The significant improvement in our performance during 2010 reflects our disciplined focus on margin ahead of volume growth. We have continued to improve the quality of our landbank and add value to our existing sites through replans and operational efficiency. We now have the financing in place to enable us to continue that progress towards our aim of achieving double digit margins in 2012."
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers, commented,
"With the expected sale of the group's US division likely to all but eliminate company debt, full year results look somewhat overshadowed. Nonetheless, like rivals, a concentration on profit margins at the expense of volumes has seen the company engineer a turnaround in adjusted pre-tax profits, with costs being cut and adjustments made to the sales mix underpinning a rising in the average sale price.
"Furthermore, the reported progress in North America may only add to the list of interested parties. On the downside, mortgage availability remains constrained, whilst industry sales patterns clearly reflect the ebbs and flows of consumer confidence, confidence which in the UK, is slowly being tested by increasing austerity measures.
"In all, from a housebuilder nearly pushed over the edge by its ill-timed merger, Taylor Wimpey appears to be firmly on the road to recovery. 2011 is expected to be a further year of progress, supported by ongoing cost cutting, while more recently acquired lower priced land should contribute to the recovery in the company's profit margin. Buoyed by the hoped for US disposal, market consensus opinion continues to denote a buy."
By 11:30 shares in Taylor Wimpey were up 2.82 per cent on the FTSE 250 to 40.10 pence per share.