Shares at British homebuilding firm Taylor Wimpey (LON:TW) have climbed a modest 1% after the company released an optimistic trading update for the year ending 31 December 2020, citing a “healthy sales rate” and “strong demand” for its resilient performance during the Covid-19 pandemic.
Wimpey announced that it has started 2021 with an “excellent” order book following a strong recovery in sales and production in the second half of 2020 once initial lockdown measures were lifted to allow construction and relocating to resume. It ended 2020 with a total order book valued at £2.68bn or 10,685 homes, up 23% on the previous year-end.
Total UK home completions (including joint ventures) decreased by 39% to 9,609 however, due “primarily to the impact on production capacity during the second quarter shutdown”, and the company was only able to deliver 1,904 homes during the second quarter, down 3% year-on-year.
Its net private reservation rate for 2020 was 0.76 homes per outlet per week, compared to 0.96 in 2019, and cancellation rates for the full year were 5% above normal levels at 20% – although they normalised in the final quarter to 16%.
Average selling prices on private completions increased by 6% to £323k – compared to £305k in 2019 – with the overall average selling price increasing 7% to £288k.
Wimpey’s net cash at the year-end was £719m, with the homebuilder stating that it will restart dividends with a final 2020 payment, and will consider a “special dividend” for 2021. It expects to meet consensus operating profit expectation for 2020 of £293m, and reassured that it has not yet experienced any significant supply chain issues as a result of Brexit.
In a statement, the company said:
“Throughout 2020 we were encouraged by the continued resilience of the UK housing market, underpinned by low interest rates and strong customer demand, and despite the further lockdown in January 2021, interest levels remain good. We enter the year more than 50% forward sold for 2021 private completions.
“Whilst there remains some economic uncertainty given the COVID-19 pandemic and Brexit, the outlook for the UK housing market remains robust. We start 2021 in an excellent financial position, with a strong order book and a clear focus on cost and efficiency. We remain confident of achieving our medium term operating margin target of 21-22% and are well placed to deliver strong and reliable returns for our stakeholders”.
Shares at Taylor Wimpey rose 1.58% to 163.55p at GMT 10:39 on Thursday, extending recent gains of +35.81% in the past 3 months despite a sharp drop during the first UK lockdown when construction was suspended.
