11 January 2024
If you are covering Taylor Wimpey’s FY2023 trading update, please see comments below from Oli Creasey, property analyst at Quilter Cheviot:
“Taylor Wimpey’s trading statement this morning has at least matched expectations, with the company guiding to a full-year operating profit figure at the top end of the previously provided guidance range of £440-470m.
“Yesterday, its close peer Persimmon released a statement which noted that while sale volumes had increased in Q4 2023, prices had fallen quite sharply by -5% at year end. Taylor Wimpey has chosen a different path – its full year sales rate (0.62x) was slightly higher than Persimmon overall but implied a slight slowdown later in the year. However, the average selling price of £324,000 was an incremental improvement against half year numbers, suggesting that the recent prices achieved by Taylor Wimpey were actually higher than earlier in 2023.
“A similar theme is visible in 2024’s order book. While the number of sales agreed is down -7% year-on-year, the average price of those sales has only fallen by -2%, while the equivalent figure for Persimmon was -6%. The interaction between price and volume is a difficult balancing act, and in the current environment companies have to prioritise one or the other. Taylor Wimpey’s results appear to show a management team prioritising price, the right focus in our view, as you can only sell a house once.
“Like Persimmon, the outlook guidance provided by Taylor Wimpey was limited, and noted that while build cost inflation and mortgage rates were coming down, the short term outlook remains uncertain.”
