WIMPEY has emerged from a year spent picking itself off the floor with

perhaps a better idea of what it is trying to achieve than one or two of

its competitors in the contracting industry.

It certainly needs to do something because too many of its businesses

are just marginally profitable or dependant upon one-off circumstances

to make shareholders comfortable.

For the year to December 31, Wimpey reported a modest pre-tax profit

of #25.5m compared with a #112m loss incurred in 1992.

But only UK housebuilding can hold its head up high and even there,

Wimpey will have to work hard to move up to the profit levels being

achieved by smaller rivals such as Persimmon or Bryant.

There are no prizes for guessing that the Scottish operations were the

star performers with Wimpey building about 1600 units and with margins

in excess of 10%.

The current year should see an advance to about 1900 dwellings and

with even fatter returns from an operation that contributed about 20% of

the 8134 UK sales.

Overall housing margins rose from 3% to 6.5% and an operating profit

coincidentally identical to the group pre-tax result.

Chief executive Joe Dwyer reckons that by the end of this year as the

provisioned land is worked out, margins could hit 10%. That points to an

average of about 8% overall but with the prospect of an industry level

of 12% plus in 1995.

Overseas housing broke even overall with losses of perhaps #2m in

California where Wimpey intends packing up its bags to concentrate on

Florida and Georgia.

It is also looking to depart from Australia as well as France and

Spain because the returns do not justify the effort. Instead management

skills are to be used to much greater extent on expanding contracting

though a more financially oriented approach.

The present situation where the division turned over #659m last year

to generate a mere #2.2m operating profit and all of that earned abroad

is obviously not sustainable as a serious way of making money.

Instead, the push will be into projects that require skills and deep

pockets -- joint ventures on an equity basis with perhaps local

authorities, trust hospitals or major industrial companies.

Chairman Sir John Quinton was making all the right noises yesterday

about shareholder value and adequate levels of profitability.

Cost-cutting will contribute several millions, but the company does need

to rid itself of the remainder of its property portfolio. To call some

of the buildings albatrosses brings on slightly pained looks so let's

call them cuckoos in the nest that are eating up resources.

However, that is patently insufficient and so it is quite possible

that there could be a significant acquisition.

Certainly thanks to the #300m disposal programme so far and last

summer's #104m rights issue, Wimpey is quite well-heeled with

end-December debt of #28m or 5% gearing.

The City gave a somewhat churlish response yesterday to the optimism

about the US and UK economies and marked the shares down 8p to 210p.

The profits outlook is for about #50m this year which would leave the

shares trading at around 25 times likely earnings -- which is expensive

unless something decisive happens -- and the pressure is mounting. The

dividend total has been held at 5.25p for a 3.2% yield.