3rd Aug 2022 17:55
(Alliance News) - Taylor Wimpey PLC's robust balance sheet leaves it well-positioned to navigate the uncertainty within the domestic housing market as interest rates rise and consumer budgets become further squeezed.
Taylor Wimpey on Wednesday raised its full-year outlook as it reported a 16% rise in interim profit.
For the six months that ended on July 3, the Buckinghamshire-based firm said revenue came in slightly lower, however, at GBP2.08 billion, down 5.4% from GBP2.20 billion a year earlier due to the "lower level of completions in the UK," the company explained.
Pretax profit rose 16% year-on-year to GBP334.5 million from GBP412.5 million. Net operating expenses were 15% lower at GBP189.9 million from GBP224.6 million a year earlier.
Taylor Wimpey completed 6,790 homes during the half, excluding joint-ventures, down 7.0% year-on-year but ahead of guidance.
Taylor Wimpey declared a 4.62 pence per share dividend, up 12% from 4.14p a year earlier.
Looking ahead, Taylor Wimpey expects yearly operating profit at the top end of the current market consensus range, helped by average selling prices, which it forecasts to rise 4% to 5% year-on-year. It also expects low single digit year-on-year growth in UK completions for 2022, with margin guidance unchanged.
AJ Bell's Russ Mould was impressed by Taylor Wimpey's performance saying that guiding toward the top end of forecasts, despite facing challenges around surging raw material costs, shortages of workers and supply chain issues, was "no mean feat".
Mould highlighted that Taylor Wimpey is on track to hit volume targets as house price growth continues to outpace inflationary and interest rate pressures, but cautioned this may not last.
"The way the housebuilders have been sold off in 2022, with Taylor Wimpey among them, suggests the market reckons they can't win this race forever. This seems a logical position to take. Rising mortgage costs and other pressures on household finances are very likely to hit demand. This could shake the foundations of the housebuilding sector but, unlike before the Great Financial Crisis 15 years ago, those foundations are at least built on relatively sold ground.
"Taylor Wimpey is not alone in having a strong balance sheet and it has invested in land at attractive prices. This, plus the long-standing supply and demand imbalance in the UK housing market, provides at least some confidence in the long-term outlook."
By Arvind Bhunjun; [email protected]
Copyright 2022 Alliance News Limited. All Rights Reserved.
Related Shares:
Taylor Wimpey