Flat sales prices and the rising cost of building homes offset an increase in volumes last year for Taylor Wimpey (TW.), eroding the operating margin by two percentage points to 19.6 per cent. Build cost inflation has begun to ease and management expects it to come in at 3 per cent this year, compared with 4.5 per cent in 2019. However, the housebuilder is still attempting to cut costs, which will result in lower sales volumes this year, which management hopes will hold the margin steady. Over the medium term it has set an operating margin target of between 21 and 22 per cent.
Completions rose 5 per cent and the net private sales rate for the year to date, excluding bulk deals, is 0.92 per outlet, up on 0.90 the same time last year. Indeed, indicating renewed faith in the housing market among house buyers this year, the group was almost half forward sold for private completions this year. Notably, 84 per cent of completions were forward sold in central London, the epicentre of the housing slowdown over the past four years, compared with 50 per cent in February 2019.
In line with the group’s efforts to reduce the length of its short-term landbank, fewer plots were acquired, which meant the short-term landbank remained steady at around 76,000 plots. The average cost of land as a proportion of selling price also dipped to 14.9 per cent, while the average selling price in the short-term owned landbank rose 1.4 per cent to £285,000.
Analysts at Peel Hunt forecast adjusted pre-tax profits of £811m and EPS of 20.5p, rising to £835m and 21.2p the following year.
| TAYLOR WIMPEY (TW.) | ||||
| ORD PRICE: | 212p | MARKET VALUE: | £6.96bn | |
| TOUCH: | 211.4-212p | 12-MONTH HIGH: | 238p | LOW: 142p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 101p | NET CASH: | £518m** | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)* |
| 2015 | 3.14 | 603 | 15.1 | 1.67 |
| 2016 | 3.68 | 733 | 18.1 | 2.82 |
| 2017 | 3.97 | 682 | 17.0 | 4.74 |
| 2018 | 4.08 | 811 | 20.1 | 6.24 |
| 2019 | 4.34 | 836 | 20.6 | 7.64 |
| % change | +6 | +3 | +2 | +22 |
| Ex-div: | 2 Apr | |||
| Payment: | 15 May | |||
| *Excludes special dividend of 10.7p in 2019. **Includes lease liabilities of £27.9m. | ||||
