Taylor Wimpey has issued an encouraging trading update which suggests that demand for new homes hasn’t wavered in the face of political uncertainty. Thanks to improved cost pressures and increasing sales, Taylor Wimpey is on track to deliver its full year 2019 results in line with expectations.
Its Pete Redfern, Chief Executive, said: “We are on track to deliver full year 2019 results in line with our expectations driven by an industry-leading sales rate. In spite of wider political and economic uncertainty, housing market conditions have remained resilient. We are focused on the delivery of the highest service and build quality to our customers and investing in the sustainability and future capacity of our business.
“In the second half, we continued to see good demand for our homes and have built a very strong order book. Looking ahead, our cash generation and financial position are very strong and we reiterate our commitment to returning c.£610 million by way of total dividend to shareholders in 2020.”
The housebuilder said that the UK housing market remained resilient through the second half of 2019, continuing to benefit from strong underlying demand, low interest rates, a competitive mortgage market and the Government’s Help to Buy scheme.
However, the statement warned that customers were exercising caution in pricier markets such as London and the Southeast, which have been harder hit by political uncertainty.
Overall, sales remain ahead of last year. Its sales rates for the year to date stands at 0.96 sales per outlet per week (2018: 0.81), with a sales rate of 0.92 in the second half of the year to date (2018: 0.77).
The housebuilder also reported a softening in the cost pressure experienced earlier in the year and expects that cost inflation will reduce in 2020.
Taylor Wimpey said that it had invested in new programmes that are specifically focused on enhancing build quality and has continued to invest in customer service. Therefore, the housebuilder said it was disappointed that its ‘would you recommend’ score in the Home Builders Federation survey dipped just below the 90% level earlier in the year, however it said that recent performance is back at a five-star level.
“We see the long term shortage and quality of construction skills as a key pressure for the industry and so we are particularly pleased to note that we now employ over 640 apprentices, which has tripled in the last four years to an all-time record as we have moved from pilot into implementation.
“We welcome the tapering measures previously announced by the Government for the Help to Buy scheme as the equity loan scheme transitions to a close in 2023. We continue to develop our own plans to extend the affordability and accessibility of our homes across a range of market conditions, including in an environment without Help to Buy.”
The statement concluded: “We are on track to deliver full year 2019 results in line with our expectations, albeit with slightly higher volumes and slightly lower operating margins than we guided at the half year.
“We are operating in a market environment where economic and political uncertainty has increased as the year has progressed. We are focused on the core drivers of value for customers and our investors. We believe the Group is well positioned for all potential market outcomes due to our strong balance sheet, high-quality landbank, healthy cash generation and strong order book. As we move into 2020, we will continue to prioritise these, in addition to increasing our focus on costs.”
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