Taylor Wimpey helped lift the gloom over the housebuilding sector today with a stronger than expected trading update that sent its shares higher and raised hopes that the industry may have seen out the worst of the downturn.
The developer’s CEO Jennie Daly said it was delivering “a resilient performance in what continues to be a challenging market”.
An efficiency and cost control drive in response to the downturn in demand after last year’s mini-Budget means operating profit is now expected to be “at the top end of our guidance range of £440 million to £470 million”.
The expected number of homes delivered is unchanged at 10,000 to 10,500. In the second half of the financial year to date, net private sales rate per outlet per week — the benchmark measure of activity — was unchanged on last year at 0.51 with a cancellation rate of 21% down from 24%. However, the order book has shrunk to £1.9 billion representing 7,042 homes from £2.6 billion, or 9,153 homes.
Andy Murphy, director at investment research firm Edison Group said that in a “tumultuous year” for residential property “Taylor Wimpey has responded with a strategy of caution. With the stalling of mortgage rates and inflation, the continued undersupply of housing, and a slight rise in house prices in October, the residential property sector can end 2023 with cautious optimism.”
Taylor Wimpey shares are up 2% to 117.9p today.
Analysts at RBC “Taylor Wimpey's trading update struck a positive tone. The market is challenging, but it expects to deliver full year operating profits at the top end of the market's expectations. In our view Taylor Wimpey has remained agile in the face of challenging market conditions. This agility and responsiveness is paying dividends in 2023, and positions the Group well for 2024.”
