11th Jul 2005 07:00
Taylor Woodrow PLC10 July 2005 TAYLOR WOODROW plc TRADING UPDATE Taylor Woodrow plc will be announcing its half-year results on September 6th 2005. In advance of this, the company is providing the following update to trading for the six months to June 30th 2005. We continue to make good progress in delivering our strategy and expectoperating profit for the half year to be slightly ahead of market expectations,although down on a strong first half last year. Overall Housing As previously indicated, overall housing completions were down - 8% on last yearat 5,064 (H1 2004: 5,521). Average selling prices for the Group improved by 1%to £200,000 (2004 H1: £198,000) and margins remained broadly level. We arecontinuing to see the benefit of our strategy over the last three years ofinvesting disproportionately in North America relative to the UK. The groupremains well placed for growth, with the total housing order book up 9% at£1.60bn (2004 H1: £1.46bn) and our landbank up 16% at around 73,700 units(December 2004: 63,701 units), both mainly driven by North America. UK Housing We enjoyed a strong sales performance relative to a market which was much moredifficult than in the first half of last year; total net reservations were downby 1%, from 3% more sites. Net reservations per site were down by 4%, which issignificantly better than the market as a whole. Completions were down 17% at3,194 (H1 2004: 3,869), despite having started the year with an order book thatwas down 32% on the previous year. The order book now stands at around £600m,18% lower than at June 2004 (£733m). Average selling prices were down 3% to £194,000 (H1 2004: £199,000), with thereduction mainly attributable to a slightly higher proportion of socialcompletions and apartments than in the same period last year. Overall,underlying prices are stable. We have continued to use part exchange in adisciplined manner and have reduced our stock levels by over 10% (December 2004:£74m). Operating margins have reduced by just under 0.5% (H1 2004: 16.1%). Thisincludes the benefit of higher than usual land sales, such as the Quartermileproject in Edinburgh, which was completed in January. Underlying housingoperating margins fell by 2% to around 14%, reflecting a more competitivemarket, reduced overhead recovery on lower volumes and ongoing cost pressures.We continue to focus on cost control through supply chain management, use ofstandard products and pull through from strategic land. Although planningremains difficult, we have been successful in securing consents on strategicland, for example, with the approval for 2,300 homes in Swindon. As a result of this and prudent purchasing in the land market, we have increasedour land bank by 4% to around 33,800 units (December 2004: 32,459). Over onethird of our total land bank has been sourced through our strategic landprogramme. North America Housing The North America housing market remains very strong. Home completions increasedby 11% to 1,667 (H1 2004: 1,500) at an average selling price up 11% toUS$398,000 (H1 2004: US$358,000). Operating margins will be around 1.5% higherthan the 15.0% reported for H1 2004. The markets in California, Arizona and Florida continue to be strong with robustselling price growth. This is tempered by rising build costs due to somematerials shortages and increased energy costs. The Texas market has not seenthe same levels of selling price growth as our other US markets. In Canada, themarket started slowly due to inclement weather, but has now returned to morenormal levels. North America will represent a higher proportion of Groupoperating profit in the first half of 2005 than in the same period last year (H12004: 24%). At the end of the first half our order book was up by 40% at US$1.65bn (H1 2004US$1.18 bn). This includes over $200m of sales revenues from our new high risecondominium business in Florida that is scheduled to complete this year. We haveincreased our land bank by 27% to around 38,000 units (December 2004: 30,009). Spain and Gibraltar Housing In Spain and Gibraltar, home completions increased by 34% to 203 (H1 2004: 152).Average selling prices are down 13% to £163,000 (H1 2004: £188,000) reflecting achange in geographic mix. Operating margins will be around 5% higher than the28.1% reported for H1 2004. At the end of the first half our order book was up by 10% at £86m (H1 2004:£78m) and the land bank was 54% higher at around 1,900 units (December 2004:1,233). Other Taylor Woodrow Construction increased its external order book by about 8%.Internal work in the order book fell by a third, reflecting a continued shiftaway from high rise city centre developments. Operating margins will be broadlyin line with last year (H1 2004: 2.5%). During the first half, we completed the sale of the Orchard shopping centre atDidcot, realising some £30m in cash. We remain on track to dispose of theremainder of our business park portfolio by the end of the year, releasingapproximately £50m of cash. The sale of the K2 development property wascompleted on 1st July for a cash consideration of £117m and will be recognisedin the second half of 2005. Net debt at the end of June was at a similar level to last year (H1 2004:£801m). Outlook All of our markets have good long term fundamentals. Taylor Woodrow's strategyof increasing investment in our overseas markets at a time of short termuncertainty in the UK housing market continues to bear fruit. The outturn for2005 remains dependent on near term market conditions in the UK where we expectmargins to continue to be under pressure. However, our balance of profitgeneration between the UK, North America and Spain, together with a record orderbook and land bank, means that we remain well placed to deliver future growth. - ends -Notes to editors: Taylor Woodrow is a housing development group. Its primary business is thedevelopment of sustainable communities of high quality homes in the UK and inselected markets in North America and Spain. The company is listed on the LondonStock Exchange and in the year ending 31 December 2004 turnover increased by 26%to £3.3 billion. For further information please visit the company's website -www.taylorwoodrow.com For further information, please contact Ian Morris 0121 600 8520 / 07816 518 767Taylor Woodrow Public Relations John Holland-Kaye 0121 600 8394 / 07816 517 200Taylor Woodrow Investor Relations Charles Cook / Dan de Belder 020 7861 3232 / 07710 910 563Bell Pottinger This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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