Taylor Wimpey's net private sales rate fell from 0.97 to 0.75 over the last year, including planned bulk deals, with cancellation rates edging marginally higher from 14% to 15%. Excluding these bulk deals, the net private sales rate was 0.66. Taylor Wimpey CEO, Jennie Daly, said that "there's been an improvement in sales rate as the spring season progressed."
Total order book value stands at £2.4bn, down from £3.0bn.
The short term land bank came in marginally lower this year, down from c.87k plots to c.86k plots, and the strategic land pipeline fell from c.145k plots to c.140k plots.
Build cost inflation remains high but has moderated from the 9-10% level reported in March - a trend that Taylor Wimpey expects to continue throughout the rest of 2023. The group reiterated it's previous guidance, expecting full-year completions to be in the 9,000 to 10,500 range, weighted toward the second half.
As previously announced, 2022's final dividend of 4.78p per share will be paid on 12 May 2023, subject to shareholder approval.
The shares were broadly flat following the announcement.
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Our view
Taylor Wimpey's seen a recovery in demand over the important spring selling season, supported by UK mortgage rates pulling back from recent highs. As a result, there's been an uptick in sales rates since the sluggish tail-end of 2022, while pricing also remained resilient.
As conditions seem slightly better than originally feared, we're seeing some of the previous pessimism around housebuilders being unwound - leading to a rally of almost 20% year-to-date. But remember, this performance is not a guide to the future.
The group's certainly not out the woods yet though. While house prices have fallen slightly of late, affordability still remains a struggle for many potential buyers. Mortgage rates are still at elevated levels, despite a recent pullback, and high inflation's eating away at consumers' real income, which are both creating a recipe for falling demand.
Demand isn't the only headwind, though. Although build cost inflation has eased slightly from the 9-10% level reported in March, it still remains uncomfortably high. The sector's also facing ongoing labour and supply chain challenges, and planning permission disruptions are continuing to be a thorn in the group's side.
Housebuilders are, by definition, cyclical businesses. Performance has often risen and fallen along with broader economic conditions so it's important to look at the big picture when the downturns come round. Although of course past performance is not a guide to the future.
With that in mind, there are some positives. The landbank is a particular strength for the group, who've built a robust bank of potential projects. The focus now is bringing plots on-line, with new land spend slowing as sales rates decline. That's wise, given the cost of land is yet to reflect the less favourable outlook.
There are also some underlying tailwinds supporting the longer-term market. Brits are ideologically committed to home ownership and the country has been in a prolonged period of housing undersupply, a trend that's unlikely to change anytime soon.
The balance sheet's in good shape too, with net cash of £864m at the last count. This cash pile will certainly help provide a cushion for the bumpy road ahead.
The current dividend policy is linked to asset value, rather than earnings. That means investors are more likely to receive a base level of dividend even in a downturn. But remember, dividend policies can change on a dime. No dividends are guaranteed.
Taylor Wimpey doesn't boast the margins of some of its more specialist peers and a good deal of pain remains built into the valuation, which is well below its longer-term average. As far as broad-based exposure to the UK housing market goes, Taylor Wimpey looks to be in as robust a position as it could be for now.
Taylor Wimpey key facts
All ratios are sourced from Refinitiv. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn't be looked at on their own - it's important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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