Taylor Wimpey Do Not Expect UK Housing Market Recovery In Short Term

Wednesday, the UK's largest homebuilder Taylor Wimpey said the current operating condition in the UK housing market is very challenging. The company does not anticipate any recovery in the short term and expects conditions to possibly remain tough in the UK as well as US housing markets.

Taylor Wimpey said margins in the second half are expected to be considerably affected by pricing pressures. During this tough time, the company said its focus is on cash management, cost reduction and sales rates that are helping to retain its momentum. The homebuilder noted that the US housing markets remain weak, though it was more stable than in 2007. Taylor Wimpey now anticipates no material recovery until 2009 at the earliest. Further, Taylor Wimpey said its housing business in Canada remained comparatively stable, adding that the economy has not experienced the same levels of house price inflation as in the U.S. and UK. However, the company said it remains convinced of the fundamental value of the business over the medium and long term. Taylor Wimpey expects both the UK and North American housing markets to remain attractive in the medium and long-term due to the positive demographic trends in both markets. Constrained land supply is expected to underpin the UK housing market, while the company's ability in an improved market is expected to help increase volumes profitably in the U.S. According to the Group Chief Executive, Pete Redfern, Taylor Wimpey's experience of the downturn in the US housing market has enabled it to identify the early signs of market weakness in the UK and act swiftly to position its UK housing business for a difficult trading environment. The company also said it experienced very challenging conditions across Spain along with UK and U.S. markets in the first half. Though the company views the market in Mallorca as more stable, it said the housing market in Spain remained weak on the mainland. Additionally, the company announced that it is planning to exit its business in Gibraltar, which is expected to be completed in 2009. While stating that its liquidity position is currently strong, Taylor Wimpey said it would possibly breach its existing interest cover covenants when tested for the full year. The company also revealed that they are in discussions with the relevant lenders on amendments to certain of its existing borrowing agreements and hopes to reach a satisfactory conclusion. Copyright(c) 2008 RealTimeTraders.com, Inc. All Rights Reserved