25th Apr 2019 08:46
LONDON (Alliance News) - Taylor Wimpey PLC said Thursday the market for new-build housing has remained stable in the first four months of 2019 and its sales are ahead of expectations.
However the FTSE 100-listed homebuilder warned that its full-year margins will be hurt by rising build-costs inflation. The stock was down 4.8% in early trade Thursday at 182.95 pence each.
Taylor Wimpey said the underlying conditions driving UK housing demand "remained robust" - citing "continued good accessibility" to mortgages and low interest rates for customers, combined with high employment levels.
"We've made a good start to 2019 and in spite of wider macroeconomic uncertainty, the housing market has remained stable. We are achieving a record sales rate and building a solid forward order book for the year, although we see increased build cost pressures," said Chief Executive Pete Redfern.
The homebuilder said its sales have continued to be "encouraging" through the spring season with average private sales per outlet per week for the year to date up 1.0%, ahead of the company's expectations.
Taylor Wimpey said its sales pricing has remained flat with levels seen at the end of 2018. The company said cancellation rates remained at 13%.
The company said it will continued to prioritise building a "strong" order book. As of the week ending April 21, the company's total order book value stood at GBP2.40 billion, ahead of the GBP2.16 billion reported at the same time last year.
The order book represents 10,291 homes.
Taylor Wimpey expects its cost inflation for 2019 to be about 5% after experiencing higher than expected inflation in the early part of the year.
"This is driven by a combination of underlying cumulative inflation and exchange rates impact on the cost base of suppliers, and a higher than expected demand in the short term from defensive additional buffer stock holding in the construction industry supply chain," said Taylor Wimpey
The company added that the short term land market has remained stable. Taylor Wimpey said its market & land acquisitions in the year to date has been "encouraging".
At the end of March, Taylor Wimpey's landbank stood at about 79,000 plots compared to about 77,000 plots the year prior.
The company's strategic land pipeline stood at about 128,000 potential plots at the end of March 2019.
Taylor Wimpey said it remains on track to meet its overall expectations for the year but noted its results will be weighted towards the second half.
"Given the strong sales performance, we expect full year volumes to be slightly higher than 2018, but given the greater build cost inflation for the year, we expect margins to be slightly lower," the company said.
In 2018, Taylor Wimpey completed 14,933 homes, with 3,416 affordable home completions. The company reported pretax profit of GBP810.7 million on revenue of GBP4.08 billion.
The homebuilder expects to end 2019 with a net cash position of about GBP500 million compared to GBP644.1 million at the end of 2018.
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