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Financial Crisis and Construction Sector - Case Study Example

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This paper "Financial Crisis and Construction Sector" focuses on the fact that financial crisis affected two sectors most i.e. the financial services and the property market because both the sectors were directly linked in the way the financing of the property projects were done. …
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Financial Crisis and Construction Sector
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Download file to see previous pages When the borrowers started to default, firms have to repossess the houses and ultimately started a chain reaction which forced the prices of the housings down and as such the whole sector started to look vulnerable to the low prices and lack of demand.

Two major players in the UK market include Taylor Wimpey and Persimmon Plc- both the firms are leading players in the UK. During the current recession, the overall demand for the products of both firms was significantly affected owing to the high cost of operating and low demand. What is also evident that both the firms were affected by the level of debt they have acquired and were able to rationalize the same during the financial crisis period? Both the firms announced the job cuts as well as further announced the plans for drastic cost reduction as well as the rationalization of their debt level.

The above graph shows the movement of the firm’s share prices since Dec 2009 and indicates the overall fluctuations in the prices. These trends indicate that the firm’s prices started to decline during the latter half of the period. Recently the firm has also bought back some of its bonds thus indicating that due to an increase in the bond yields.
A closer look at the performance of the firm also indicates that over the period of last five years, the key financial indicators are depicting negative trends.2 Five years sales growth is negative and so is the negative reduction in the capital spending by the firm.

Similarly, the Persimmon Plc is also going through a difficult period as its profits are shrinking and the overall demand is suppressed. However, there are signs of recovery in the UK markets as the number of first-time buyers is gradually increasing thus removing the uncertainty from the market.
Share prices of Persimmon Plc started to decline from the start of 2007 when the financial crisis actually started to take its roots. Over the period of last one year, the firm’s share prices fluctuated within the range of 335-444 indicating that the overall sentiments of the investors towards this company are not favourable.   ...Download file to see next pages Read More
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Financial Crisis and Construction Sector Case Study. Retrieved from https://studentshare.org/macro-microeconomics/1573287-briefing-report-on-the-effect-of-the-financial-crisis-on-the-construction-sector-comparison-of-different-measures-of-corporate-performance-within-the-construction-sector-between-2001-till-2010-in-usa-uk-and-chinabonds-equities-etc
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Financial Crisis and Construction Sector Case Study. https://studentshare.org/macro-microeconomics/1573287-briefing-report-on-the-effect-of-the-financial-crisis-on-the-construction-sector-comparison-of-different-measures-of-corporate-performance-within-the-construction-sector-between-2001-till-2010-in-usa-uk-and-chinabonds-equities-etc.
“Financial Crisis and Construction Sector Case Study”, n.d. https://studentshare.org/macro-microeconomics/1573287-briefing-report-on-the-effect-of-the-financial-crisis-on-the-construction-sector-comparison-of-different-measures-of-corporate-performance-within-the-construction-sector-between-2001-till-2010-in-usa-uk-and-chinabonds-equities-etc.
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