Wimpey chief quits as profits from Britain slump by a third

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The Independent Online

The company also announced that its chief executive, Peter Johnson, 58, was to retire. Wimpey sources insisted that the decision for Mr Johnson to go was unrelated to the group's results, which the company admitted were "disappointing". They pointed out that Mr Johnson told the board he would serve for five years when he joined in 2001. He will be replaced by the head of the UK business, Peter Redfern.

Group pre-tax profits dropped 16 per cent to £366.5m for 2005, as the UK difficulties were partly cushioned by a 64 per cent jump in profits from the US. The UK business, which is one of this country's biggest home builders, saw profits drop 32 per cent to £278.0m. In the UK, sales volumes of Wimpey's private homes were down 5 per cent, and the average selling price was 2 per cent lower.

Mr Johnson said the volume of house sales nationally were down by 17 per cent. "In any other industry, if volumes fell by that amount, you'd have headlines saying that industry was in crisis," he said.

Wimpey's problem is that it has a relatively short landbank, he said. That means it is building homes on land that it bought more recently than rivals and therefore at higher prices. Mr Johnson, during his time in charge, took the length of Wimpey's landbank from 2 years to 4.2 years, but that is still poor compared with key competitors.

The company's UK margins dropped to 12.9 per cent in 2005, from 18 per cent in 2004. Wimpey said that, of the 5 per cent fall, 2 per cent was down to lower selling prices and 3 per cent to its land issues.

Mr Johnson said the company had put measures in place to improve performance, including a cost-cutting programme, and added that 2006 trading conditions should be better. Wimpey's order book is up 30 per cent so far this year. "If prices rise very modestly, the actions in place will start rebuilding margin in the second half," he said.

Many analysts have expressed concern that the booming US housing market, which provides some 40 per cent of Wimpey's turnover, is heading for a crash. But Mr Johnson said this was unlikely. "The strength of the market in the US is not a demand bubble. It is comes from underlying demographic trends and the US economy has remained strong."