Taylor Wimpey plc (LON:TW) told the market it expects results to be in line with expectations.
The company had hinted at both political and economic complications throughout the 2019 trading year as the property market was hit by external shocks.
FTSE 100 traders said the housing market remained stable last year but faced challenges in London and the south east.
Taylor Wimpey noted that the number of completed homes in 2019, including joint ventures, rose by 5% to 15,719.
“2020 continues to be a year of change for the UK, but we welcome the increased political stability following the general election,” the company said.
“We started the year with a strong order book and continue to target a smoother completion profile throughout the year, but we expect the second half of 2020 to continue to be heavily weighted,” the homebuilder said. said.
2019 ended with a record total order value of £2.17m, which marked a rebound from the £1.78 figure a year earlier.
The housebuilder said it continues to generate cash and intends to return £610m to shareholders in the form of dividends.
CEO Pete Redfern commented:
“Our results for the year to 31 December 2019 will be in line with our expectations. Despite the uncertain political and economic backdrop in 2019, housing demand remains strong. Trading in the second half was in line with expectations, with the Group again achieving record sales rates and home completions increasing by around 5% over the year.
In 2019, we focused on strengthening the long-term sustainability of our business, further improving our manufacturing quality and customer service, as well as increasing our operational capabilities and flexibility. We will continue these efforts in 2020, prioritizing a renewed focus on cost and improved process simplification. ”
Operating profit for the period decreased by 9.4% to £311.9m due to higher construction costs and geographical mix.
Market analysts are reasonably impressed with Taylor Wimpey’s performance, which should please shareholders.
John Woolfitt, Trading Director at Atlantic Capital Markets, commented:
“Today’s figures show that despite political uncertainty, the sector remains performing well. Taylor Wimpey’s record sales rates and increase in house completions all reflect It bodes well for the builder’s share price, which dispels concerns about a slowdown in prices.”
“This, and a positive result for the Conservatives in the December election, also led to further improvements across the sector and a positive outlook for the year ahead.”
“Dividends in 2019 increased significantly to £600m. 2020 dividends are not expected to jump to the same extent, but investors are looking forward to receiving a similar dividend of around £610m from Taylor Wimpey next year. You can expect that.”
Winpay build from November
In November, the company reported strong demand in its second-half update.
While Taylor Wimpey did indeed warn housebuilders about the possibility of rising costs in 2020, the company speculated in a statement on Wednesday that cost inflation could instead fall in 2020.
The FTSE 100-listed housebuilder reported a 12.5% rise in order book value to £2.7bn as it took advantage of strong demand, as well as demand boosted by low interest rates and the government’s Help to Buy scheme.
Excluding joint ventures, total orders totaled 10,433 units as of November 10, up from 9,843 units a year ago.
Housebuilding market – the end of the Boris bounce
On December 13, just as the election results hit the headlines, many UK housebuilders were pinning their hopes on their stocks.
Notable gains saw the Barclay Group Holdings PLC (LON:BKG) share price jump 13.06%, while the Barratt Developments Plc (LON: BDEV) share price rose 12.52% to 755p.
MJ Gleeson (LON:GLE) issued a market update last week saying it remains confident in the housebuilding market, which still faces uncertainty.
According to the householder, the company’s Homes division sold 811 units in the six months to the end of 2019, up 17% from the previous year from 691 units.
Additionally, Gleason said demand for the company’s affordable housing continues to be strong and home completions for the year are progressing in line with expectations.
In its 2019 financials, the company reported a pre-tax profit of £41.2m, an 11% increase from £37m the previous year.
The financial results announced by Taylor Wimpey today are impressive and shareholders will be keeping an eye on how 2020 unfolds, with the hope that Brexit negotiations turn around and much of the political uncertainty is resolved. Probably.
Taylor Wimpey shares are trading at 205p (+1.88%). 14/1/20 10:34BST.
