TIDMTW.
RNS Number : 1885T
Taylor Wimpey PLC
13 November 2019
13 November 2019
Taylor Wimpey plc
Trading statement
Overview
Pete Redfern, Chief Executive, commented:
"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.GBP610 million by way of
total dividend to shareholders in 2020."
UK market backdrop
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. Forward indicators for sales have remained at
healthy levels albeit we have seen some increasing customer
caution, particularly in the higher-priced markets of London and
the South East, as a result of the ongoing political and economic
uncertainty.
UK current trading
Sales rates for the year to date have remained strong at 0.96
sales per outlet per week (2018: 0.81), driven by our high-quality
sites and improvements in both product availability and build
capacity that we have made over the last 18 months, in line with
our strategy. We achieved a very good sales rate of 0.92 in the
second half of the year to date (2018: 0.77) and cancellation rates
for the year to date remain low at 15% (2018: 14%). We operated on
an average of 252 outlets in the year to date (2018: 274).
It remains our view that a strong order book is key to managing
short term market uncertainty. Our current total order book,
excluding joint ventures, represents 10,433 homes (2018: 9,843) as
at 10 November 2019.The order book stands at c.GBP2.7 billion
(2018: c.GBP2.4 billion), an increase of 12.5%.
Over recent months we have seen a softening in the cost pressure
experienced earlier in the year and expect that cost inflation will
reduce as we go into 2020. We are focused on increasing cost
discipline to mitigate future build cost inflation and optimise
margin.
Land
Land buying conditions remained stable in the second half of the
year. Given the strength and scale of our landbank, we continue to
push for the best possible mix of site quality and financial
returns on new acquisitions. We remain active acquirers and expect
the year end landbank to be broadly in line with the end of 2018.
During the second half up to the end of October, we added 3,222
(2018: 2,851) plots to the landbank at strong acquisition margins,
similar to those achieved in 2018, with over 60% of our short term
landbank strategically sourced. Our short term landbank stood at
c.76.5k plots (30 June 2019: c.77.1k) and our strategic land
pipeline remained stable at c.133k potential plots as at the end of
October 2019 (30 June 2019: c.131k).
Spain current trading
The Spanish housing market remained stable throughout 2019 and
the order book for our Spanish business stands at 296 homes as at
10 November 2019 (2018: 330 homes). We expect the business to
deliver a strong operating profit* in 2019 (FY 2018: GBP29.2
million operating profit*).
Group financial position
We expect to end 2019 with a net cash balance of around GBP500
million (31 December 2018: GBP644.1 million), subject to the timing
of conditional land purchases and after the payment of c. GBP600
million of dividends to shareholders in 2019.
Building our sustainable future
Our strategy is focused on our customers and we continue to
believe that by identifying and better responding to their needs,
we will have a higher quality and more sustainable business.
There are three key areas that our customers have told us are
priorities for them: service, delivery timing and finishing
quality; underlying build quality and consistency; and the creation
of outstanding places and communities. We have, and will continue
to invest, in improving our offer across each of these areas, and
measuring that improvement.
During 2019 we invested in new programmes that are specifically
focused on enhancing build quality and increasing our production
capacity and we also followed through on our investments in 2017
and 2018 in other areas around customer service and process. The
build quality programmes include additional resources on site
including greater depth of Site Managers, Quality Managers and
directly employed finishing trades, plus the introduction and
implementation of a set of national build quality standards.
Despite the cost pressures experienced during the year, we have
also maintained our construction and sales specification, in order
to meet our customers' high expectations. We are pleased that the
NHBC Construction Quality Review** measure, which we introduced in
late 2017, shows that we lead the industry in build quality. Whilst
it is disappointing that our 'would you recommend' score in the
Home Builders Federation survey dipped just below the 90% level
earlier in the year, we continue to see this measure of initial
customer satisfaction as important and are pleased that recent
performance is back at a five-star level.
We remain committed to investment in areas that will bring long
term benefits and drive future value for customers and investors,
such as our investment in apprentices and our direct labour
recruitment. 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.
This will provide a pipeline of future talent for our direct labour
requirements.
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. Our approach to reducing cyclical risk and
running our business for the long term positions us well whilst
ensuring the business retains the flexibility and potential to
grow, without compromising on quality, in the right market
conditions.
Outlook
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.
* Operating profit is defined as profit on ordinary activities
before net finance costs, exceptional items and tax, after share of
results of joint ventures
**The NHBC Construction Quality Review is an average score, out
of six, achieved during an in-depth annual review of construction
quality on a site-specific basis.
Note:
2018 relates to 2018 equivalent trading period, unless
stated.
-Ends-
For further information please contact:
Taylor Wimpey plc Tel: +44 (0) 7826 874461
Pete Redfern, Chief Executive
Chris Carney, Group Finance Director
Debbie Archibald, Investor Relations
Finsbury Tel: +44 (0) 20 7251 3801
Faeth Birch
Anjali Unnikrishnan
Notes to editors:
Taylor Wimpey plc is a customer-focused homebuilder, operating
at a local level from 24 regional businesses across the UK. We also
have operations in Spain.
For further information please visit the Group's website:
www.taylorwimpey.co.uk
Follow us on Twitter @TaylorWimpeyplc
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END
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