Taylor Woodrow unexciting despite turnaround
Wednesday 29 March 1995
Pre-tax profits of £50.8m were well up on 1993's £30.2m, but they included an exceptional £8m profit from the sale of Eurotunnel shares.
The market had been expecting £48m of clean profits so it was little surprise that the shares, already well down on last year's high, fell a further 7.5p to 115.5p.
Even there they look to have little support, given the gloomy outlook for TW's main businesses and the fact that on brokers' forecasts for this year and next the shares stand on a premium rating to the rest of the building sector and the market as a whole.
Contracting, which saw profits increase from £1.3m to £4m, is plainly going nowhere in Britain, where the company candidly admits volumes are deteriorating and margin pressure is intensifying thanks to continuing overcapacity.
At least Mr Parsons, unlike some of his rivals, is facing up to the reality of the situation by cutting costs further and pulling out of operations where there is simply no hope of ever making a decent return. But a pre- tax margin of well under 1 per cent is plainly inadequate.
Property makes a better return and profits rose reasonably from £14.5m to £15.8m, but with no prospect of any development work (there is neither the cash nor the inclination in currently flat markets) the division offers little excitement.
Last year Taylor took the view, correctly it has transpired, that the real growth to come would be in housing, where the company has an enviable geographic spread.
Profits jumped during the year by 133 per cent to £21m with completions rising around the world and acquisitions chipping in nicely.
But the peak of that cycle is looking ominously close. In the UK prices are flat and margins under pressure from rising costs. Elsewhere, Australia looks ripe for a fall and the US is close to peaking.
Prospects are too unexciting to warrant a prospective price-earnings ratio of 13.3 this year and 11.5 in 1996 on the basis of profits of £54.5m this year and £64.5m next time. And a 2.4 per cent yield, even after a 50 per cent jump in dividend to 2.25p, hardly underpins the price. Sell.
- 1 California man brutally beat 82-year-old Sikh grandfather he mistook for 'one of those people'
- 3 Charles Kennedy 'had better judgement drunk than many sober politicians' says Ian Hislop
- 5 We have six months to save the world, says leading economist
California man brutally beat 82-year-old Sikh grandfather he mistook for 'one of those people'
Sepp Blatter resigns: FBI are investigating outgoing Fifa president, claims report
Alton Towers crash: Four seriously injured and 16 guests trapped as Smiler ride carriages collide
Gay teenager 'forced to have sex with his own mother' to 'cure' his homosexuality, campaigners in India say
Charles Kennedy 'had better judgement drunk than many sober politicians' says Ian Hislop
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination
Migrants in Kos: Photos show real tragedy after Brits abroad complain of 'awkward' holidays
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
Michael Gove determined to scrap the Human Rights Act – even if Scotland retains it
Threat to scrap Human Rights Act could see UK follow Nazi example, warns UN official
Church of England 'one generation away from extinction' after dramatic loss of followers
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...
£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...
£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...
£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...