Taylor Wimpey exceeds expectations, raises FY operating profit guidance

Taylor Wimpey shares increased 3.2% to 124p in early morning trading on Wednesday, following a HY1 performance ahead of market expectations.

The housing giant reported completions slightly ahead of expectations at 6,790 homes, excluding joint ventures, with a 16.3% rise in pre-tax profit to £334.5 million compared to £287.5 million the last year.

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However, Taylor Wimpey confirmed a revenue dip of 5.4% to £2 billion against £2.1 billion, linked to lower levels of completions compared to the 7,219 achieved in HY1 2021.

The group mentioned the impact of rising cost inflation at 9% to 10%, and noted the climbing expenses were being countered by house price growth.

The property company highlighted an operating margin uptick of 0.1% to £434.6 million compared to £424 million, alongside an operating profit margin growth of 1.1% to 20.4% from 19.3% year-on-year.

“I am pleased to report an excellent financial and operational performance with completions in the first half slightly ahead of expectations,” said Taylor Wimpey CEO Jennie Daly.

“This was a very good performance against a strong comparator and only possible due to the hard work of our outstanding teams across the business, and I would like to thank them for their continued commitment and efforts.”

FY 2022 guidance

Taylor Wimpey confirmed a projected FY 2022 operating profit at the top end of market expectations, as a result of strong average selling prices on completions, which are expected to rise 4% to 5% compared to the last year.

The firm reported a total order book of £2.8 billion going forward, compared to an order book of £2.7 billion the year before.

The company acknowledged the volatile macro-economic environment, and commented it would remain “agile” to tackle hurdles across the financial period.

“Taylor Wimpey capped off a strong first half where completions came in ahead of expectations and operating profit for the full year’s now expected toward the top end of previous guidance – the shares popped a couple of a percent as a result,” said Hargreaves Lansdown equity analyst Matt Britzman.

“The forward order book looks strong and Taylor Wimpey’s doubling down on efforts to take full advantage, opening the check book to push more outlets and being new land plots into the fold.”

“Cost inflation remains a thorn, running around 9-10% but fully offset by higher prices for now. It remains to be seen how long that can continue, but while it does shareholders can continue to expect solid returns.”

Taylor Wimpey announced an interim dividend of 4.6p per share, representing an 8% rise against HY1 2021.

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