International News

Taylor Wimpey expects its full-year performance to come in at the upper end of forecasts after reporting a rise in first-half profits. 

The company's pre-tax profits rose 16.3 per cent to £334.5million, despite a 5.4 per cent drop in revenue to £2billion, as slashed costs helped widen margins. 

It told investors on Wednesday it now expects annual operating profit at the top of end of the company-compiled analysts' expectation range of £873million to £924million. '

Average selling prices on private completions increased by 3.1 per cent to £337,000, against £327,000 by the same point a year ago.

The group's total average selling price increased by 0.3 per cent to £300,000, against £299,000 a year ago. 

Completed homes in the first six months of the year topped 6,790, which was ahead of guidance. 

Taylor Wimpey said Help to Buy scheme usage 'continued to decline' in the first half, comprising around 20 per cent of private reservations, against 27 per cent in the first half last year. 

The group said: 'We will stop taking reservations under the scheme by the end of October and are well progressed to deliver build completions by the year end and legal completions by 31 March 2023, meeting the government deadlines.'

The update from Britain's third-largest homebuilder comes at a time when the wider UK housing industry is plagued by challenges including surging costs, labour shortages and prolonged pandemic-related supply chain issues. 

Boss Jennie Daly hailed an 'excellent' start to the year for the firm against a turbulent economic backdrop. 

Daly said: 'While we recognise and are closely monitoring wider macro-economic and political uncertainty, housing market fundamentals remain positive, supported by an enduring supply and demand imbalance and good availability of attractively priced mortgages.'

Looking ahead, the company said full-year performance would be 'driven by strong average selling prices on completions that are expected to be 4-5 per cent higher than last year'.

The FTSE 100-listed firm, which also has a small presence in Spain, said the sector had seen increased material and labour costs with build cost inflation of around 9 to 10 per cent, but this had been offset by house price growth. 

But it still expects ‘low single digit’ year-on-year growth in UK house-builds this year. 

Taylor Wimpey said it would make a cost-of living payment of up to £1,000 for employees receiving an annual salary of up to £70,000 as economies firefight a surge in inflation.    

Richard Hunter, head of markets at Interactive Investor, said: 'The company’s general progress comes against strong comparatives from the previous year, where the carry-over of completions after the release of lockdown restrictions flattered some of those earlier numbers. 

'The balance sheet also remains in good health, enabling a £150million share buyback programme to be completed over the period, and also an increase to the dividend which leaves the projected yield on the stock at a punchy 7.5 per cent.

'Trading is strong and the outlook upbeat, as evidenced by the market consensus of the shares which remains resolutely positive, coming in at a strong buy. 

'Share price performances have far from reflected this optimism across the sector as a whole, however. 

'Despite the initially positive reaction to the numbers, Taylor Wimpey shares have declined by 28 per cent over the last year, as compared to a gain of 4.3 per cent for the wider FTSE 100, underlining that caution rather than hope remains the watchword for this beleaguered sector at present.'

Oli Creasey, a property research analyst at Quilter Cheviot, said: 'Management continues to have a positive outlook, noting that mortgage availability (at attractive rates) remains high, as does customer interest. 

'We note that the private sales rate in July is relatively low, but it is unclear if this is a seasonal issue or a sign of things to come. 

'We suspect the former given Taylor Wimpey has indicated that they have fewer homes ready for sale than usual, simply due to timing and the forward sales rates remain high, with almost 90 per cent of 2022 sales already agreed. 

'However, we will be watching closely for any indication of shrinking volumes from Taylor Wimpey and other housebuilders.'

The Bank of England is expected to hike interest rates further on Thursday, which could pile pressure on borrowers looking to get on or move up the property ladder. 

He added that the protest was a “solid approach” and something “that will actually work”. “Don’t Pay wouldn’t have caught so much attention if it were a simple gimmick,” he said. “It will work, and everyone, including the energy industry and government, know it.”

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