Shares in Taylor Wimpey rose on Thursday after the housebuilder said operating profit would be at the high end of its previous guidance.
Although the company expressed concerns about the macroeconomic environment in its trading statement, recent deals have failed to energize investors as much as other homebuilders.
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Persimmon made headlines earlier this week by announcing an increase in its full-year completion outlook, but it’s hard to get too excited about this morning’s Taylor Wimpey update.
Taylor Wimpey’s share price was up 1.5% at the time of writing, but the housebuilder’s update lacked the optimistic outlook seen in recent releases from its peers.
The group’s net personal sales ratio has declined to 0.63 since the beginning of the year, down from 0.74 in the same period last year. As of the second half of this year, the sales ratio has fallen to 0.51.
Taylor Wimpey said it was confident operating profits would reach the upper end of its previous guidance of £440m to £470m, but did not change its completion outlook.
Garry White, chief investment commentator at Charles Stanley, said: “Taylor Wimpey shares rose ahead of today’s trading update on hopes of signs of life in the housing market.”
Taylor Wimpey’s share price has already risen this week, appearing to factor in improved sentiment towards the UK house builder. Although the situation has improved slightly for Taylor Wimpey, deep doubts remain about the sector’s future profitability.
Mr White went on to explain that Charles Stanley is cautious about the outlook for the sector and expects completions to decline further.
“Although the company did not raise its completion forecast, earnings are expected to be at the high end of the forecast.”Nevertheless, no actual guidance for 2024 has been released and the number of completions in 2023 and 2024 is We remain cautious on the sector as we expect declines and could result in a significant decline in sector revenues,” White said.
“Volumes are likely to bottom out soon as the mortgage market stabilizes and construction cost inflation eases, but margins are likely to recover quickly due to increased use of incentives and a challenging economic backdrop. is low.”
