Taylor Woodrow unexciting despite turnaround

Colin Parsons has done a creditable job in turning Taylor Woodrow round from 1992's £94.5m loss, but he gained few friends in the City yesterday by turning in underlying profits more than 10 per cent below most analysts' expectations.

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.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent