Taylor Wimpey more than doubles profits

STABILITY in the housing market and selling more family homes helped housebuilder Taylor Wimpey to more than double first-half profits.

The group posted profits before tax and exceptional items of £78.2m in the first six months of the year, versus £28.9m a year earlier.

It built 5,083 homes in the half, an eight per cent increase on the prior year. Average selling prices were up five per cent to £176,000, reflecting a shift away from apartments to building more family homes.

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“We’re cautious on the wider world, but our own sector is looking very stable and there are some positives from Government that have the potential to support the housing market going through the next six to 12 months,” said chief executive Pete Redfern.

“We have been reassured by the continued stability in trading conditions and the strength of our order book.”

By the end of July Taylor Wimpey was 86 per cent sold for the year and its private order book was 18 per cent ahead of the previous year at £688m .

Revenues gained 10.8 per cent during the six months to £906.2m.

The group said market stability was underpinned up “reasonable homebuyer confidence and ongoing undersupply of new housing”. Cancellations remain below the long-term average at about 15 per cent.

Houses with one to three bedrooms comprised 43 per cent of its completions during the first half, compared with 39 per cent a year earlier. The percentage of apartments slipped to 25 per cent from 26 per cent.

But its output of “affordable” homes or social housing dropped 11.1 per cent to 893 completions. The average price of an affordable home dipped to £115,00 from £117,000.

Private sales were up 12.6 per cent to 4,137 completions. The average price of a private sale rose 3.8 per cent to £189,000.

Taylor Wimpey has been busy in the first-time buyer market, with 37 per cent of its properties sold to new homeowners, up from 29 per cent a year earlier.

The group said sales using the Government’s FirstBuy scheme comprised 641 of completions in the first half. The scheme helps new buyers onto the housing ladder by sharing the deposit burden with housebuilders and Government.

Another housing stimulus tool, NewBuy, was launched in March and allows first-time buyers and movers to borrow up to 95 per cent of the value of a property, with builders and the Government helping to underwrite some of the risk. Taylor Wimpey said NewBuy was used in 201 reservations during the first half.

In line with other housebuilders, Taylor Wimpey said it has seen stronger trading in the South than the North.

Taylor Wimpey has 18 sites across Yorkshire, including in Leeds, Sheffield, Wakefield and Bradford. Recent developments include Weavers Gardens in South Normanton and The Banks in Waverley. It plans to open six Yorkshire sites in 2012. Excluding contractors, it employs 100 staff in the region.

In the North, the group said “good quality locations and products sell well at stable prices”. It added the South East and London “continue to be the strongest markets”.

It also declared an interim dividend of 0.19p per share, having not paid a dividend in the same period last year. The company recommenced dividend payments in February with a 0.38p final dividend, its first payout since 2007.

Analysts at Panmure Gordon said: “Interim results from Taylor Wimpey are ahead of expectations and the group remains on track to report further progress in key metrics at the year end.”

Peel Hunt analyst Robin Hardy said the results were strong and could spark a rally in the company’s share price, but house builders remained vulnerable because demand was heavily skewed by the London housing market.

“We are not expecting a collapse but a slow deflation in prices and, though Taylor Wimpey’s and the sector’s earnings will continue to rise, they may not be as high as the market expects by mid-cycle around 2015,” he said.

Turnaround 
in Spain

TAYLOR Wimpey’s Spanish arm is on course for a turnaround despite the country’s weak economy.

Chief executive Pete Redfern said market conditions in Spain, where the company has been building holiday homes for 54 years, are tough but the company expects to turn a first-half loss into a full-year profit as it finishes building more homes in the second half.

“We continue to see interest from overseas buyers, particularly from Germany and from UK purchasers looking to take advantage of sterling’s recent strength against the euro.”

It completed 13 sales in Spain during the first half, less than half the 30 sold a year ago.