31 July 2024
If you are covering Taylor Wimpey's half year results, please see the following comment from Oli Creasey, property analyst at Quilter Cheviot:
"Taylor Wimpey’s half year results reflect the ongoing stress in the UK housing market but are also showing some reasons for optimism.
"The number of properties sold is low at 4,728, and lower than last year, while the average sale price has declined very marginally by -1%. That has driven profit, and profit margins, lower. However, both the sales rate and profit metrics are in line with company guidance and sell-side expectations and are perhaps even slightly ahead. While management haven’t quite increased guidance for the FY, they are now indicating that completion will be towards the top end of the previously disclosed range of 9,500-10,000 homes. The cash on balance sheet was also ahead of expectations and supported a small increase in the dividend to 4.80p per share.
"The slowdown in volume appears to be a timing issue. Taylor Wimpey had -8% fewer outlets open during 2024 compared to 2023, but saw an increased sales rate at those which were open. That 0.75x sales rate (homes sold per outlet per week) is getting close to the company and industry’s long term average which is likely around 0.85x. This is despite the impact of mortgage rates remaining higher than was anticipated at the start of the year.
"The outlook for H2 2024 and 2025 is improving. Taylor Wimpey management note that trading during July has been relatively strong despite the summer holidays being a historically slow period. The impact of inflation and falling prices is expected to reduce and result in an improvement in the company’s profit margins in H2 2024. Management also have good visibility on the 2025 pipeline and expect a return to growth next year, as long as the wider market conditions are supportive.
"Management also notes that while it is still early on in the Labour government, they are encouraged by the changes being discussed around planning."
