Two of the UK’s biggest housebuilders, Taylor Wimpey and Persimmon, are due to shrug off the gloom surrounding the property market when they report significant increases in profits.
Both housebuilders have provided bullish trading updates in recent months and are expected to report strong performances in the second half of 2010 despite the UK government’s comprehensive spending review in the autumn, which deterred buyers, and the snow in December, which disrupted sales and building work.
Rivals Barratt Developments and Redrow have both posted upbeat results in recent weeks after they built more family homes rather than flats to reduce their exposure to first-time buyers struggling to get mortgages.
Taylor Wimpey is forecast to post pre-exceptional pre-tax profits of £51.2 million in 2010 on Thursday, compared with losses of £96.1m the previous year, as it cuts costs in the UK and sees strong sales growth in the US. Revenues are expected to be flat at £2.6 billion.
Taylor – which trades as Bryant Homes, Laing Homes and George Wimpey – returned to profit in its half-year results as it focused on margins rather than sales growth and its average sale price increased by 10 per cent as it built fewer flats.
Meanwhile, Persimmon is expected to report on Tuesday pre-exceptional pre-tax profits of £88m, up from £7m in the previous year.
In January, it said it had achieved a significant increase in underlying profits for 2010 after turnover lifted by 10 per cent to around £1.6bn.
This followed the completion of 9,384 sales in the year at an average price of £167,000, itself an improvement of 6 per cent.
The housebuilder has doubled its margin to 8 per cent over the past year, helped by building more family-sized homes and fewer apartments.
Insurance giant Aviva is expected to make further progress on the back of strong recent sales growth, while profits should also benefit from the group’s ongoing efficiency measures on Wednesday.
The City expects the company to report operating profits of between £2.2bn and £2.4bn in 2010, compared with £2bn last year.
When Aviva last updated the market, with its third-quarter results, it reported a 26 per cent increase in sales to £2.4bn.
The sales trend improved in the third quarter and pushed the rate for the first nine months of the year up to 16 per cent at £12.3bn, while worldwide new business rose 5 per cent.
The market will be on the lookout for news of the group’s plans to reduce its expenditure.
Repost from Scotsman By Peter Ranscombe