Taylor Wimpey plc (LON:TW) have told the market that they expect their results to be in line with expectations.
The firm had alluded to both political and economic complications across the 2019 trading year, as the property market was hit by external shocks.
The FTSE 100 trader said that the housing market remained stable in the last year, however there were challenges faced in London and the South East.
Taylor Wimpey noted that total house completions in 2019 has increased by 5% to 15,719 which included joint ventures.
“While 2020 will continue to be a year of change for the UK, we welcome the increased political stability following the general election,” the company said.
“We start the year with a strong order book and continue to target a smoother profile of completions throughout the year but expect 2020 to continue to be second half weighted,” the housebuilder said.
2019 ended with a record total order book valued at £2.17 million, which showed a ruse from the £1.78 figure a year ago.
The house builder said that it remains cash generative and intends to return £610 million to shareholders in a dividend form.
Pete Redfern, Chief Executive, commented:
“Our results for the year to 31 December 2019 will be in line with our expectations. Despite an uncertain political and economic backdrop in 2019, we have continued to experience a good level of demand for our homes and trading in the second half of the year was as anticipated. The Group has again delivered a record sales rate and we increased home completions by c.5% in the year.
In 2019, our focus was on strengthening the long term sustainability of the business, further improving our build quality and customer offering, as well as increasing operating capacity and flexibility. In 2020, we will continue with these initiatives and will also prioritise a renewed cost focus and process simplification improvements.”
Operating profit for the period was down 9.4% to £311.9 million, however this was attributed to higher build costs and geographic mix.
Market analysts have been somewhat impressed with the performance of Taylor Wimpey, which will please shareholders.
John Woolfitt, Director of Trading at Atlantic Capital Markets commented
“Today’s figures show, that despite political uncertainty, the sector is still performing well. Record sales rates for Taylor Wimpey and an increase in home completions all bode well for the builder’s shares which are shaking off any concerns over slowing house prices.”
“This, and a positive outcome for the conservatives in the December election, has also led to further upgrades for the whole sector and a positive outlook for the year ahead.”
“Dividends increased significantly to £600m in 2019 and although dividends are not set to jump to the same degree in 2020, investors can look forward to a similar payout of around £610m from Taylor Wimpey in the year ahead.“
Wimpey build from November
In November, the firm reported strong demand in their second half update.
Taylor Wimpey did warn homebuilders about potential rising costs in 2020, however in the Wednesday statement, the firm speculated that cost inflation may reduce in 2020 instead.
The FTSE 100 listed home builder, reported a 12.5% rise in its orders, to £2.7 billion as it exploited strong demand coupled with lower interest rates and the governments Help to Buy scheme boosting demand.
Total order book, excluding joint ventures, stood at 10,433 homes as at November 10 from 9,843 homes a year earlier.
The Homebuilding market – Boris Bounce wears off
Just as the election results were hitting news headlines on 13th December, many of the British Home builders saw their shares in green.
Notable rises came from Berkeley Group Holdings PLC (LON:BKG) whose shares spiked 13.06%, whilst Barratt Developments Plc (LON: BDEV) shares rose 12.52% to 755p.
MJ Gleeson (LON:GLE) updated the market last week saying that they remained confident in a home building market that was still facing uncertainty.
The householder said that its Homes unit had sold 811 units during the half year period to end 2019, which saw a 17% climb year on year from the 691 figure.
Additionally, Gleeson said that the demand for its low cost homes remains strong and is on track to deliver full-year unit completions in line with expectations.
For financial 2019, the firm reported pretax profit of £41.2 million, which showed growth by 11% from the £37 million a year ago.
The results today posted by Taylor Wimpey are impressive, and shareholders will be keen to see how 2020 unfolds as the Brexit negotiations take their turn and hopefully many political uncertainties are cleared.
Shares of Taylor Wimpey trade at 205p (+1.88%). 14/1/20 10:34BST.