Taylor Wimpey expects 2023 profits to come in at the top end of guidance following a ‘resilient performance’ amid ‘significant uncertainty’ in the housing market.
The property developer anticipates making £440million to £470million in operating profits this year, which it attributed to a ‘focus on optimising price and sharp cost discipline’.
It also upheld its guidance to build 10,000 to 10,500 new homes, having achieved an average weekly sales rate of 0.51 per outlet so far during the second half of 2023 – the same as last year – thanks to lower cancellation rates.
Forecast: Taylor Wimpey anticipates making £440million to £470million in operating profits this year
The FTSE 100 group’s weekly private sales volumes have declined to 0.63 per outlet since the beginning of the year, compared to 0.74 over the equivalent period in 2022.
British housebuilders have suffered weaker mortgage affordability and availability as 14 consecutive Bank of England base rate hikes hamper consumer demand.
Demand for homes has been further impacted by labour shortages, higher building material costs, restrictive planning laws, and the end of the Help to Buy scheme.
As of 5 November, Taylor Wimpey’s order book excluding joint ventures was valued at about £1.9billion and 7,042 homes, against £2.6billion and 9,153 homes at the same point last year.
Nonetheless, chief executive Jennie Daly said the business ‘has delivered a resilient performance in what continues to be a challenging market backdrop’.
She said: ‘Looking ahead, while the market backdrop remains uncertain, we are confident in the medium to long term sector fundamentals, with a meaningful supply and demand imbalance in UK housing.’
The group added: Looking ahead, there remains significant market uncertainty and our focus is on ensuring we remain agile and well positioned to optimise performance in all market conditions, delivering quality homes to our customers and long term growth and value to our stakeholders.’
Taylor Wimpey’s announcement echoes an update on Tuesday by Persimmon, which upgraded its annual new-build forecasts despite seeing new home completions slump by 37 per cent between July and 6 November.
The York-based firm expects to deliver 9,500 properties in 2023, having previously guided for 9,000 during the summer, although it warned ‘market conditions will remain highly uncertain’ into next year.
A day before its trading statement, the latest S&P Global/CIPS UK construction purchasing managers’ index reported a reading of 45.6 for October.
Any number below 50 indicates a contraction.
It largely blamed the figure on housebuilding volumes falling for the 11th successive month and at a faster pace than other areas of the construction industry amid steep interest rates.
Analysts at RBC Capital Markets said: ‘In our view, Taylor Wimpey has remained agile in the face of challenging market conditions.
‘This agility and responsiveness is paying dividends in 2023, and positions the group well for 2024. Overall, Taylor Wimpey’s trading upbeat in a downbeat market.’
Taylor Wimpey shares were 1.6 per cent up at 117.4p on Thursday morning and have grown by approximately 13 per cent during the year.