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(Sharecast News) - Housebuilder Taylor Wimpey trimmed its forecast for annual home completions on Friday as it reported a decline in first-half profit and completions, and said it was reducing shareholder returns.
In the half year to 28 June, adjusted operating profit fell 19.4% to 129.7m, while profit before tax and exceptional items was 19.9% lower at 118.6m. Revenue ticked up 1.7% to 1.7bn and completions including joint ventures dipped to 4,986 homes from 5,264 in the same period a year earlier.
The company achieved a net private sales rate of 0.75 per outlet per week, down from 0.79.
The housebuilder said the market backdrop remains uncertain following a more challenging second quarter, where affordability constraints and increased geopolitical uncertainty impacted customer sentiment and behaviour.
Taylor Wimpey said that while underlying customer demand continues to be good, conversion is taking longer and buyers remain highly price conscious.
Looking ahead, it expects market conditions to remain challenging for the rest of the year, with underlying pricing below prior year levels and full-year build cost inflation of around 3% to 4%.
As a result of the lower first-half sales rate and ongoing market backdrop, it now expects full-year UK completions excluding joint ventures of between 10,600 and 10,800 homes, versus previous guidance for between 10,600 and 11,000.
Taylor Wimpey also said it has decided to cut its cash returns to shareholders as the housing market downturn has proved more prolonged than expected.
"The board believes that a revised annual return of 4% of net assets strikes the right balance between continuing to provide an attractive level of shareholder return whilst giving the group greater flexibility and resilience through the cycle," it said. The previous distribution level was 7.5% of net assets.
The new annual payment level comprises a minimum of 2% of net assets as an ordinary dividend, together with a further 2% of net assets returned either via dividends or share buybacks.
Chief executive Jennie Daly said: "We delivered a solid first half performance in a challenging market, reflecting the hard work and commitment of our teams. We achieved a robust sales rate and continued to make positive planning progress supporting further outlet growth.
"Against a backdrop of continuing market uncertainty in which affordability remains stretched, we are focused on delivering our strategy and generating value from our strong balance sheet and high-quality, well located landbank. We are managing the business tightly, controlling costs and building resilience for an improved housing market when it comes.
"Reflecting the prolonged nature of the downturn which has reduced expected profitability and cash generation, the board has reviewed the level of cash returns and deemed it prudent to revise our distribution policy to preserve balance sheet strength, retain financial flexibility and support our commitment to optimising shareholder returns through the cycle."
At 0809 BST, the shares were down 5.4% at 78.52p.
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