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Company spotlight: Wimpey


A NEW broom is sweeping over Wimpey after Pete Redfern replaced Peter Johnson as chief executive at the start of July.

That change is not the reason the stock has been undone by selling over the spring.

It is down to investors jittery over the state of the housing market in the USA, where Wimpey's subsidiary Morrison is heavily exposed.

Wimpey is always among the fastest of the house builders to get results out and figures for the first half of this year swiftly allayed any concerns, with Morrison generating a healthy £67 million-worth of profits.

That total compares with a group first half operating profit of £179 million, which illustrates the exposure, but Wimpey is stripping costs out of this business to offset continuing uncertainty.

The UK was the surprising area of concern. Average sale prices were down along with operating margins, despite a healthy rise in completions.

Wimpey's margins have always been off the pace of the rest of this sector and this is an area that the new chief executive is addressing.

A rapid improvement will certainly reassure the City.

Of 16 covering analysts, six are positive and seven neutral, with the remaining trio negat ive to some degree.

That is hardly damning and the volume of analysts covering the shares certainly indicates the uptake in interest in the sector, which was prompted by consolidation.

Wimpey has not ruled out taking this route again but prefers organic growth, which will help raise those margins and steady the UK business.