Taylor Woodrow forecasts poor sales

IN A further sign the housing market is cooling, housebuilder Taylor Woodrow warned sales were likely to be 6% lower than hoped because potential buyers were taking longer to commit to purchases.

The group stuck by profit expectations for 2004 but said the 'continuing negative media speculation' surrounding the market was having an impact.

In a trading update, Woodrow said the sector still remained 'attractive' but that the market in the UK had reverted to a lower level of activity compared with the strong performance seen in the second half of 2003.

Woodrow had been hoping to sell as many as 10,000 homes this year after interim results in August showed a 31% rise in profits to £168.7m.

With last year's acquisition of Wilson Connolly helping the figures, Woodrow completed almost 4,000 properties in the half year and saw operating profits for its UK business - branded Bryant Homes - lift to £132.2m.

Since then, visitor levels have been broadly stable on a year earlier while the company has achieved modest increases in average selling prices, which in August stood at £199,100 following a 6% rise on a year earlier.

In today's update, Woodrow said the integration of Wilson Connolly was now complete and had resulted in savings ahead of the expected £12.5m.

However, it added proceeds of £17m from the sale of an office-based development in London would be taken in early 2005, rather than in December as it had previously suggested.

In North America, where Woodrow generates almost a quarter of its business, profits are expected to be 'substantially higher' than earlier forecast.

The recent hurricanes have had some impact on production in the US but would not have an effect on the bottom line, the company said. Woodrow is likely to complete around 3,500 homes in the US this year.

Prior to today, analysts had been looking for underlying annual group profits of around £440m, compared with £324m reported a year earlier.