LONDON, March 6 (bdnews24.com/Reuters) - British housebuilder Taylor Wimpey said on Thursday its forward orders fell 19 percent and it suspended a $996 million share buyback plan due to tough market conditions, taking nearly 6 percent off its shares.
The group, formed by the merger of Taylor Woodrow and George Wimpey in July 2007, said profit before tax and exceptional items fell by 31 percent to 535.6 million pounds ($1.06 billion) from 776.5 million a year ago, compared with analysts' average forecast of 530.1 million.
"We've seen in the first few weeks of the year an increase in sales rates... but it is still running some way below more normal levels. The cancellation rate is also lower than the second half of last year but still running higher than we'd like to see," Chief Executive Pete Redfern told reporters.
"So there's no doubt the UK market is more subdued and it's going to be a quite challenging year."
The group, which announced a 750 million pounds share buyback in July and has since repurchased 250 million pounds of shares, said it had decided to suspend the programme "temporarily until conditions improve".
Shares of Taylor Wimpey, which have fallen more than 50 percent over the past six months, dropped 1.3 percent to 162.4 pence by 0846 GMT, having fallen as low as 155p.
"Not unexpectedly the outlook comment is gloomy with the group facing very challenging housing market conditions in both the UK and North America," Cazenove analysts say.
"We are again reducing our earnings per share estimates to reflect the suspension of the proposed share buyback programme."
The group said its forward home sales fell by 19 percent to 1.335 billion pounds as of end-February, as consumers remain cautious due to tight mortgage lending and economic uncertainties.
It completed 20,690 homes last year, 5 percent fewer than a year ago, at an average selling price of 188,000 pounds, up from 186,000 pounds.
But its UK operating margins rose to 15.2 percent from 12.8 percent, beating its 14 percent target, as the group continues to take action to achieve synergy targets from the merger.
TOUGH US MARKET
Taylor Wimpey, which also has operations in the United States, Canada, Spain and Gibraltar, said the North American business was also well positioned for difficult market conditions, as unsold inventory was reduced by 29 percent in the second half.
Its US home completion fell by 23 percent to 6,740 homes, with margins tumbling to 5.1 percent from 17.5 percent, as housing meltdown triggered by risky mortgage lending lowered housing prices and increased cancellation rates and land writedown. Its average selling prices fell 13 percent to 175,000 pounds.
"We are closely monitoring sales rates at each of our sites, actively adjusting our pricing and incentive packages to ensure that we remain competitive in local markets," it said.
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