In a half-year trading update, Taylor Wimpey has reported a 43% drop in pre-tax profit from £414.5million to £237.7million.
Despite a promising start to the year, the national housebuilder was severely hampered by rising costs and planning delays, which resulted in a reduction in completions and sales rate as potential buyers were deterred by the rising cost of mortgages.
Taylor Wimpey also saw turnover fall by 21% year on year to £1.64billion, while its profit margin was squeezed to 14.4% from 20.4%.
The trading update reported that the housebuilder had seen an encouraging start to the year, with demand starting to recover from the impact of the mini-budget towards the end of 2022.
However, the second quarter of 2023 saw market conditions weaken as inflation increased, a move that also raised build cost which “was not fully offset by house price inflation for the period”.
During the period, the developer’s completions dropped by almost 2,000 year-on-year to 5,120 homes, and its sales rate fell from 0.90 to 0.71 homes per outlet per week. Its average selling price rose to £320,000, up 6.7%. Despite the fall in completions, Taylor Wimpey said that it is still on track to finish the year towards the high end of its forecast, with between 10,000 and 15,000 completions.
For the first half of the year, Taylor Wimpey saw a significant reduction though in the number of new outlets opened, which stands at 13, down from 50 in the first half of 2022. The developer put this down to a reduction in land buying and the difficulties faced in the planning system.
Jennie Daly, chief executive of Taylor Wimpey, said: “The first half of the year has been characterised by variable market conditions including substantially higher mortgage rates. While this has inevitably impacted our results, I am pleased that we have delivered a resilient performance with first-half completions slightly ahead of our expectations. This performance is a testament to the hard work of our teams on the ground and our strong focus on operational excellence and tight cost management.”
“As we move into the second half of the year, our focus remains on optimising all areas of our operations as we continue to support our customers during this uncertain period. With a healthy order book and strong underlying interest for our well-located, high-quality homes, we expect full-year UK completions excluding joint ventures to be in the range of 10,000 to 10,500, the upper end of our previous guidance.”
“Taylor Wimpey is a strong, sustainable and agile business underpinned by a robust balance sheet and an excellent landbank. We remain well positioned to manage the business through near-term challenges while maximising value in the medium to long term.”
