Housebuilder Taylor Wimpey said today that first-half underlying profits dived 96 per cent to £4.3m as it wrestled with the housing market downturn.
The firm, which is the UK's biggest homebuilder by number of properties built, racked up overall pre-tax losses of £1.54bn after writing off £690m from the value of its land bank and another £816m in relation to the merger of Taylor Woodrow and George Wimpey last year.
Debt-laden Taylor Wimpey also said it was working to amend its borrowing agreements, and said it hoped these would be finalised by the end of the year.
Total group sales during the six months to 30 June were 8,494. This is down more than 30 per cent from the 12,228 sold on a pro-forma basis during the same period last year.
Taylor, which operates in the UK, United States and Spain, also said average selling prices of private homes in the UK fell 10 per cent during the period, with a 7 per cent drop for social housing.
Average selling prices in the US, which accounts for around one-sixth of group turnover, fell around 28 per cent.
To recognise falling land prices and slower activity, the group has written off £585.9m against UK land and work in progress during the first half of 2008, as well as £70.8m in the US and £33.3m in Spain.
Taylor Wimpey has net debts of £1.7bn following last year's merger, and has seen its banking covenants come under pressure due to the falling sales and land values. Last month the company unsuccessfully tried to raise a reported £500m to help shore up its finances.
Chairman Norman Askew said: "The first half of 2008 has been characterised by the very challenging trading conditions in the UK, US and Spain.
"The board remains convinced of the fundamental value of the business over the medium and long term and our primary focus is to amend certain of the existing borrowing agreements.
"To this end, the group is engaged in constructive dialogue and is not aware of any issues which would prevent these amendments being finalised by the end of this year."
The firm said today it was likely to breach its existing interest cover covenants when tested for the full year.
"Constructive discussions with the relevant lenders are ongoing and the board is of the view that a satisfactory conclusion will be reached," it added.
Last month Taylor Wimpey announced it was closing a third of its 39 regional offices with the loss of 900 jobs to help save cash. The move will save the group £45m annually in overheads.
Chief executive Pete Redfern said he saw conditions remaining tough in the short term - but sounded a positive note over the longer term.Reuse content