Taylor Wimpey releases strong results, despite looming uncertainty

Indicating another year of strong performance, Taylor Wimpey has issued a trading update ahead of its full year results, which will be announced on 27 February 2019.

While the update states that it is too early to give a definitive view on 2019 trading, the company continues to see “solid forward sales indicators,” and has started the year with a “very strong” order book. It warns however of the potential impact of “the wider political and economic uncertainty,” with the Brexit date now looming, and has said that it will continue to closely monitor market conditions for any such impact. It was largely good news for shareholders however, who were likely pleased to hear that the company remains committed to returning £600m in total dividends in 2019, subject to their approval.

CURRENT TRADING The 2018 full year results will reportedly be in line with expectations, with the housing market remaining stable through- out 2018, however this is against a background of “an uncertain macroeco- nomic and political environment.” During the year, Taylor Wimpey stated that it saw good levels of demand, which converted into strong sales rates across the business. Total home completions were increased

by 3 per cent in 2018 to 14,947 (including joint ventures), up on 14,541 in 2017. A total of 3,416 of these homes were afford- able, equating to 23 per cent of total


completions, as apposed to 2,809 in 2017 at 19 per cent.

The company’s net private reservation rate for 2018 was 0.80 homes per outlet, per week, up from 0.77 in the previous year. Cancellations rates were up one per cent on 2017, to 14 per cent. Average selling prices on private completions increased by 2 per cent to £301k, with the overall average selling price remaining flat at £264k. Trading was reported to be robust, despite, as previously reported, signs of increasing customer caution towards the end of 2018 in London and the South East. Taylor Wimpey’s total order book ended 2018 valued at £1,782m, excluding joint ventures. The company cites its strategy to increase efficiency and drive growth through the “targeted operations of its last sites” as the reasons for this. This order book represents 8,304 homes, with the growth reportedly due to affordable housing.

The company has entered 2019 with 256 outlets, down from 278 as of the 31st of December 2017, and traded from an average of 273 outlets in 2018, down from 287. As the company has previously reported, this is slightly lower than expected, with delays impacting opening timing, and the higher sales rate achieved in the second half of the year resulting in closing outlets slightly earlier. Build cost inflation in 2018 was reported to be 3-4 per cent, which the company states is in line with its previous guidance. Along with these results, Taylor Wimpey

noted its average customer satisfaction score of 90 per cent in 2018, measured by the Home Builders Federation (HBF) eight-week survey, and that is has been named in the top ten places to work in the UK by Glassdoor, the only commercial housebuilder to make the list.

THE GROUP’S POSITION The group ended the year with a “strong” net cash balance of c.£644m, up on £511.8m in 2017, ahead of expectations. This is after the payment of £500m of dividends to shareholders in 2018, up from £450.5m in the previous year. Pete Redfern, Taylor Wimpey chief executive, commented on the results: “I am pleased to report another year of strong performance, in line with our expectations. Despite wider macroeconomic uncertainty, the housing market remained stable during 2018 and we had a good trading perform- ance. We are continuing to deliver against our strategy and ended the year in a positive position, underpinned by our strong order book and balance sheet. “As we enter 2019, we maintain our guidance for stable volumes although are mindful of market sensitivity. We are confident that our focused strategy of managing the business through the cycle and driving further operational improvements will enable us to continue to deliver a high-quality product and service to our customers, long term value for shareholders and growth into 2020.”

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