Wimpey builds profit on housing recovery

A SHARP recovery in profits from the housing division helped Wimpey back into the black in the six months to June. Confirmation of persistently difficult construction markets and a flat dividend, however, pushed the shares 2p lower to 163p.

Joe Dwyer, chief executive, said: 'The external climate for our business is becoming increasingly benign and, while construction markets remain difficult, there is evidence that the impact of recession is starting to moderate.'

Pre-tax profits recovered to pounds 7.5m compared with last year's restated pounds 200,000 loss. Earnings per share at 1.36p (0.28p loss), however, failed to cover the maintained 2p dividend.

A fourfold increase in the return from housing from pounds 2.6m to pounds 10.5m was driven by the strong UK market in the first quarter. Despite an overall price increase of about 20 per cent, the land bank ended the half 1,000 plots higher than at the end of 1993.

Worldwide completions were 4,252 against 3,251 in the first half of last year. More than 8,000 sales are expected for the year.

In construction the order book rose from pounds 585m to pounds 595m, although a decline in Channel Tunnel work disguised an upward trend. Margins remained tight and profits fell from pounds 5.8m to pounds 3.8m.

Volume and price rises in the minerals division were offset by a decline in the US, where a bad winter shut down operations until spring. Profits, pounds 4.6m last year, were cut to pounds 100,000.

Mr Dwyer said Wimpey had expressed an interest in all four joint- venture road projects announced as part of the Government's private finance initiative. But he warned that private companies would only be involved if they could make a decent return on investment of 10 to 15 per cent.

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