Taylor Wimpey shares fell on Friday after revising its dividend policy and guided completions towards the lower half of its range, as stretched affordability and a wobbly second quarter continue to weigh on the housing market.
The UK property optimists were dealt a blow on Friday after one of the UK’s leading builders took evasive action due to poor market conditions.
The FTSE 100 housebuilder reported first-half revenue of £1,683 million, up 1.7%, but adjusted operating profit fell 19.4% to £129.7 million as margins compressed to 7.7% from 9.7% a year earlier.
Completions including joint ventures slipped to 4,986 homes from 5,264, though average selling prices rose 6.7% to £334,000 on regional and product mix.
Citing the prolonged downturn and its impact on profitability and cash generation, the board has cut annual shareholder distributions to 4% of net assets to preserve balance sheet strength.
Net cash nearly halved year on year to £168.6 million, and is expected to end the year at around £250 million after roughly £100 million of cladding-related outflows.
Current trading conditions also didn’t make for pretty reading.
The net private sales rate in the four weeks to 26 July was 0.55 per outlet per week, down from 0.59, with buyers described as highly price conscious and taking longer to convert.
Underlying pricing sits around 2% below prior year levels, and the order book has thinned to £2,002 million from £2,190 million a year ago.
Investors would have also been disappointed with completions.
Full-year completions are now expected between 10,600 and 10,800 homes, in the lower half of March’s guidance, with build cost inflation of 3-4% expected.
Taylor Wimpey shares were down 5% at the time of writing.