Taylor Wimpey build up £1.54bn deficits

TAYLOR Wimpey, the UK's biggest homebuilder, has recorded pre-tax losses of £1.54 billion for the first six months of the year.

The company's losses came from a £690 million writedown in the value of its landbanks in the UK, North America and Spain in the wake of the credit crunch.

The company also wiped off another £816m in relation to the merger of Taylor Woodrow and George Wimpey last year.

It also saw underlying first-half profits plummet 96 per cent, to just £4.3m, down from £119.8m last year, as it struggled to cope with the housing market downturn.

Profits from its UK business fell 39 per cent over the period, and the situation is similarly bleak in the US, where the firm's profits fell by 63 per cent, and in Spain, where profits fell 85 per cent.

Despite the poor results, the company said it was preparing for the future.

The firm is cutting about 900 jobs in the UK, after the squeeze on mortgage finance severely reduced demand for new homes.

Pete Redfern, Group Chief Executive, said: "Our experience of the downturn in the US housing market has enabled us to recognise the early signs of market weakness in the UK and act swiftly to position our UK housing business for a difficult trading environment," he said.

"Whilst conditions are likely to remain tough in both the UK and the US in the short term, we believe that both markets continue to be attractive on a longer-term view."

The heavily indebted builder last month appointed investment bank NM Rothschild to restructure its debt after it failed spectacularly in its bid to raise £500m in new capital.

It has borrowed £1.7bn from the banks and has been seeking to renegotiate terms of the loans.

It remains at risk of breaching banking covenants relating to repayments on its debt, according to its own projections, and the company said constructive discussions with the relevant lenders were ongoing.

Chairman Norman Askew said: "The Board remains convinced of the fundamental value of the business over the medium and long term and our primary focus is to amend certain of the existing borrowing agreements."