Taylor Wimpey shares gained on Thursday after the housebuilder said operating profit would be at the top end of previous guidance.
The company voiced concerns about the macroeconomic environment in a trading statement that didn’t invigorate investors to the extent other housebuilders have in recent trading sessions.
Persimmon stole the show earlier this week by announcing increased completions guidance for the full year, and it’s difficult to get overly excited about Taylor Wimpey’s update this morning.
Although Taylor Wimpey shares were 1.5% higher at the time of writing, the housebuilder’s update lacked the optimism evident in their peers’ recent releases.
The group’s net private sales rate has fallen to 0.63 year-to-date, down from 0.74 in the same period last year. In the second half of the year to date, the sales rate has fallen to 0.51.
Taylor Wimpey said they were confident operating profit would be at the top end of the previously guided £440m to £470m, but did not alter their completions guidance.
“Shares in Taylor Wimpey have risen ahead of today’s trading update, as hopes there would be signs of life in the housing market,” said Garry White, Chief Investment Commentator, Charles Stanley.
The rise in Taylor Wimpey’s shares already this week looks to have priced in any improvement in sentiment around UK housebuilders. Although the situation is marginally better for Taylor Wimpey, there are still nagging doubts about earnings for the sector going forward.
White continued to explain Charles Stanley was cautious about the outlook for the sector and expected completions to fall further.
“The company did not raise its guidance for completions, but profits are expected to be at the top end of guidance. Nevertheless, no real guidance for 2024 has been issued and we remain cautious on the sector due to the expected decline in completions in 2023 and 2024, which will result in a significant downturn in sector earnings,” White said.
“Although volumes are likely to hit a floor soon as the mortgage market stabilises and build cost inflation eases, the increased use of incentives and tough economic backdrop means margins are unlikely to recover rapidly.”
