- Revenues fall 20%
- Profits down over 40%
- Company cooperating with CMA
Shares in Taylor Wimpey (TW.) were down over 3% to 135p in morning trading as the UK housebuilder said pre-tax profit had fallen 42.8% to £473.8 million for the year to 31 December compared to £827.9 million in the same year ago period.
The company’s share price performance today contrasts with a 10% gain over the past year.
SALES VOLUMES DOWN
Total revenue for the group was down 20.5% to £3.5 billion compared to £4.4 billion in the same period last year, with chief executive Jennie Daley blaming the fall on an ‘uncertain macroeconomic backdrop’ and a ‘challenging planning environment.’
However, average UK selling prices on private completions were up 5.1% to £370,000 with the overall average selling price up 3.5% to £324,000.
Daley was quick to reassure investors the company was in a ‘strong financial position’ going forward and had the ability ‘to provide investors with a reliable income stream via our differentiated ordinary dividend policy’.
CMA INVESTIGATION
Earlier in the week, the CMA (Competition and Markets Authority) launched an investigation into UK housebuilders Barratt Developments (BDEV), Bellway (BWY), Berkeley (BKG), Persimmon (PSN), Redrow (RDW), Taylor Wimpey, Vistry (VTY) and privately held Bloor Homes concerning ‘suspected sharing of commercially sensitive information’ which could be influencing the build-out of sites and new home prices.
The suspected sharing of information is not one of the main drivers of the problems highlighted in the CMA’s report, said chief executive Sarah Cardell, but added ‘it is important we tackle anti-competitive behaviour if we find it.’
Taylor Wimpey said it welcomed the CMA report and would ‘co-operate fully’ with the investigation.
EXPERT VIEW
Oli Creasey, property analyst at Quilter Cheviot, said: ‘Taylor Wimpey’s full year results don’t contain too many surprises but paint a picture for 2024 that doesn’t look too different to 2023, and potentially a little worse.
‘The company guided to an operating profit of circa £470 million in January, which has been confirmed this morning. The dividend payout for the year is 9.58p, a yield of almost 7%, which was ahead of market expectations.
‘2024 has started on a reasonable footing, with a sales rate of 0.67x (houses sold per site per week), a little faster than the equivalent period last year. However, the company’s guidance for 2024 volumes is to sell between 9,500-10,000 homes over the course of the year. The middle of this range implies a -10% fall in volumes vs 2023.
‘The story is similar for house prices. Overall prices rose +3.5% in 2023, but comments from management suggest that the profit margin will be lower in 2024 (at least in the first half) as the forward order book has been sold at slightly lower prices than 2023. On the plus side, build cost inflation has effectively disappeared, with the prevailing rate of +1% effectively reduced to zero by Taylor Wimpey’s efficiency measures.’
