Taylor Woodrow slashes payout on plunge into losses

TAYLOR WOODROW yesterday provided further evidence of the crisis in UK construction by slashing its interim dividend from 1.86p to 0.5p to save cash.

This followed a swing from profits of pounds 25.3m to losses of pounds 16m after writing pounds 21m off the value of its housing land and property developments.

The dividend cut was a little harsher than expected and Taylor Woodrow shares fell a further 8p to 35p. In 1991 they were 290p.

Colin Parsons, chairman, said the group aimed to cut overheads by pounds 20m by 1993, when it planned to be generating cash. Borrowings rose by pounds 12m to pounds 167m in the first half. A pounds 31m payment for last year's final dividend may cause borrowings to head towards pounds 300m by December, according to analysts, or 45 per cent of shareholders' funds, depending on end- year property valuations.

Group turnover fell from pounds 759.3m to pounds 579.8m in the six months to 30 June while profit before write-offs dwindled from pounds 25.3m to pounds 5m mostly because profits from investment property disposals were reduced from pounds 18m to pounds 500,000.

UK construction activities were hit hard by the decline in the commercial building market but broke even overall.

Overseas construction lost pounds 10m after making a further large provision on its troublesome Euro Disney contract near Paris.

UK housebuilding generated higher unit sales but, being biased towards the hardest hit South-east, was particularly affected by falling prices. In turn this has prompted the group to write down its housing land and work in progress by pounds 17.5m and property developments by pounds 3.5m.

On a brighter note the company's rent roll on its investment properties, which will be revalued at the year-end, rose by 15 per cent. Overseas, Monarch stayed in profit in Canada and advanced in California and Florida.

Greenham Trading lifted profits but the group has abandoned plans to sell its Greenham Construction concrete block and aggregates business, where losses have been halved.

Amarjit Chhina of stockbroker BZW is forecasting a pounds 15m loss this year and a total dividend of 1.5p against 9.5p. He said a dividend yield of 5.7 per cent did not compensate for the uncertainty in UK construction and is advising clients to sell.

This is despite substantial asset backing for the shares. BZW forecast net asset value would be 148p at the end of 1992 compared with 162p at the end of last year.