28th Feb 2024 14:54
(Alliance News) - Taylor Wimpey PLC shares fell on Wednesday, with the market disappointed by its guidance on completions for the new year.
Shares in the company traded 4.3% lower at 134.55 pence each in London on Wednesday afternoon.
The housebuilder expects completions in the range of 9,500 to 10,000 homes in 2024, up to 12% lower year-on-year. Completions in 2023 fell 23% to 10,766 homes.
For 2024, completions will be 55% weighted to the second half, the Buckinghamshire, England-based firm said.
"While levels of enquiries are good, the company has seen conversions from enquiry to reservation take longer than usual," Analysts at Irish broker Davy said.
"Taylor Wimpey has guided to a 2024 UK volume (ex-JV) of 9,500-10,000, just over 5% below our current forecast and 6% below consensus. We thus expect FY24 earnings [forecasts] to come down on the back of this report."
Taylor Wimpey said pretax profit declined 43% to GBP473.8 million in 2023 from GBP827.9 million a year prior.
Revenue fell 21% to GBP3.51 billion from GBP4.42 billion, and the cost of sales decreased 15% to GBP2.80 billion from GBP3.29 billion.
Taylor Wimpey said it finished 2023 with 237 UK outlets, down 8.5% from 259 at the end of 2022.
The company commented: "Higher than expected inflation in the second quarter led to rate increases culminating in the base rate rising to 5.25%, well above initial market expectations. Whilst remaining high compared to recent years, mortgage rates started to fall towards the end of the year."
Despite the contraction in profit and revenue, Taylor Wimpey increased its final dividend by a penny to 4.79 pence per share from 4.78p, bringing the total payout up 1.9% to 9.58p for 2023 from 9.40p for 2022.
Commenting on Monday's report from the UK Competition & Markets Authority, which is investigating an under-delivery of homes by construction companies including Taylor Wimpey, the company said:
"Taylor Wimpey welcomes the CMA's final report, published on 26 February 2024, from its housebuilding market study with its focus on improving the planning system, adoption of amenities and outcomes for house buyers.
"Taylor Wimpey notes the new investigation opened by the CMA under the Competition Act 1998, and we will cooperate fully in relation to this."
Looking ahead, Taylor Wimpey cited "encouraging signs of improvement" such as reduced mortgage rates positively impacting affordability and confidence in the firm's customer base.
However, it cited significantly reduced land approvals over the last 18 months, adding that the constraining impact of planning on site openings in the UK is unlikely to abate in the near-term future for the sector.
"We are well positioned for growth from 2025, assuming supportive market conditions," the company said.
Chief Executive Officer Jennie Daly said: "While the planning environment remains challenging, we have a high-quality, well-invested landbank and a strong financial position which underpins our ability to provide investors with a reliable income stream via our differentiated ordinary dividend policy.
"Looking ahead we are well-positioned in an attractive market, with significant underlying demand for our quality homes and are poised for growth from 2025, assuming supportive market conditions."
By Eric Cunha, Alliance News news editor
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