9 November 2022
If you are covering Taylor Wimpey’s trading statement this morning, please see the following comment from Oli Creasey, equity research analyst at Quilter Cheviot:
"Taylor Wimpey’s trading statement this morning has some of the same flavour that Persimmon provided yesterday. In particular, TW have highlighted slowing sales rates, with each outlet selling only 0.5 homes per week (a typical figure would be 0.7-0.8x; it was 0.9x in 2021 which was a bumper year). Unlike Persimmon, TW have not provided any update on house prices, but it seems prudent to assume these are falling as well. Despite acknowledging falling volumes, management has reiterated existing operating profit guidance.
"If Taylor Wimpey’ operational results largely mirror Persimmon’s, the financial impact is not the same. While Persimmon felt obliged to increase the provision they took for cladding remediation to £350m (from £75m), TW appear to have been more prudent, already recording a £245m provision in April and We believe that means the likelihood of further material increases is relatively low. Despite slowing sales, TW has also been able to increase company guidance for the cash balance at year end by £200m, up to £800m in total, partly as a result of disciplined cost control and slower land purchases. We can’t say for certain at this point, but such a healthy balance is likely to support at least existing dividend payments, with management offering no suggestion that a dividend cut would be necessary – which was the case for PSN yesterday."
