Taylor Wimpey (TW.) provided further evidence of the health of the housebuilding sector with another solid half-year performance. For shareholders, the icing on the cake was news that a special dividend equivalent to 10.4p a share will be paid in July 2018 and confirmation that further "material capital returns" will be made in 2019. So, in 2018, the total dividend yield will be 8 per cent, which management boasted would be the highest in the sector and in the FTSE 100.
Operating profit grew by 25 per cent to £349m and average selling prices on the 6,580 homes completed rose by 6.3 per cent to £253,000. This helped to boost operating margins from 19.2 per cent to 20.2 per cent, and the return on net operating assets from 25.2 per cent to 30.8 per cent.
This puts the company well on the way to achieving targets made in May 2016: to generate an average annual return on net operating assets of 30 per cent, an average operating profit margin of around 22 per cent and to pay £1.3bn in dividends in the three-year period to 2018.
Headline profit was hit by a £130m provision to cover the cost of renegotiating terms on houses sold on a leasehold basis. The company is in negotiations with the freehold owners to achieve an alternative lease structure. The provision is a one-off adjustment, and is easily covered by the net cash position.
Analysts at Peel Hunt are forecasting adjusted pre-tax profit for the year to December 2018 of £810m and EPS of 20.1p (from £733.4m and 18.1p in 2016).
| TAYLOR WIMPEY (TW.) | ||||
| ORD PRICE: | 192.9p | MARKET VALUE: | £6.31bn | |
| TOUCH: | 192.8-193p | 12-MONTH HIGH: | 200p | LOW: 129p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 85p | NET CASH: | £429m | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)* |
| 2016 | 1.46 | 269 | 6.6 | 0.53 |
| 2017 | 1.73 | 205 | 5.1 | 2.3 |
| % change | +19 | -24 | -23 | +334 |
| Ex-div: | 21 Sep | |||
| Payment: | 03 Nov | |||
| *Excludes special dividend of 9.2p paid in Jul 2017 | ||||
