Taylor Wimpey (TW.) might expect 2018 results to be in line with expectations, but management has delivered a more cautious note for next year. Given the heightened political and economic uncertainty, the housebuilder expects that sales volumes will be flat for 2019, citing signs of customer caution, notably in the south-east of England. However, given the sound pillars of support for the new-build sector, there is the potential for significant growth from 2020 onwards.
Sales rates for the year to date remained strong at 0.81 sales per outlet per week, unchanged from a year earlier, while cancellation rates have remained steady at 14 per cent. Current sales outlets were lower than expected at 261, down from 285 a year earlier mainly because of delays having an impact on the timing of new openings. However, the company has started to increase the number of larger sites, thereby increasing efficiency.
Excluding joint ventures, the order book stands at 9,783 homes, up 12 per cent from a year earlier, with the order book valued at £2.4bn, up from £2.2bn, while build costs are expected to rise by 3-4 per cent. The company is also tightening its hurdle rates on new land acquisitions, increasing the investment margins and returns on capital employed. More than 10,400 plots have been added in the year to September to the short-term land bank, leaving it broadly flat at around 75,000 plots. On top of this, there is a strategic land pipeline of more than 120,000 potential plots. Finances are in good shape, and the company confirmed its intention to return £600m to shareholders by way of dividends in 2019 – a 20 per cent increase on 2018.
