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The Markets
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The Markets
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Real Estate

Taylor Wimpey sees higher profits after record orders

The group said excellent summer sales had strengthened further in the autumn

Housebuilder Taylor Wimpey (LON:TW.) reported a record order book and forecast higher profits this year.

The group said excellent summer sales had strengthened further in the autumn as UK wages and mortgage availability improved.

Sales rates for the year to date are ahead of last year as strong sales in the second quarter continued through the traditionally slower summer period and into the autumn.

For the second half to date, sales rates are about 22% above the same period in 2014.

It expects to improve operating profit margins by more than 200 basis points in 2015 and a return on net operating assets of over 25%.

Chief executive Pete Redfern said: "Against a backdrop of rising real incomes and tighter mortgage regulation with good availability and affordability, we believe that consumers have resilience to future interest rate movements."

While noting improvements in British wage growth in the last few months, analysts have cautioned that the country's housing shortage could keep prices artificially high.

While wages have continued to rise, the rate of increase has been dropping, with the figure for September falling to 2.5% from 2.8% in August.

Taylor Wimpey has sold all the homes it expected to complete in 2015 and has already sold about 27% of those it expects to complete in 2016.

The current total order book represents 8,546 homes against 7,814 at the same time last year and stands at a record £2.1bn, excluding joint ventures, versus £1.7bn a year ago.

The company said its build costs had risen 5% in 2015 but increases in sale prices had more than offset those rises, which were driven by higher labour costs.

It added: "We expect to see a slightly reduced level of build cost increase during 2016 to that experienced in 2015 as more capacity returns to the sector, including through our apprentice, management and graduate trainee schemes."

Taylor added that the Spanish market had meaningfully improved in 2015, fuelled by newly acquired sites.

Chief executive Pete Redfern said: "Against a backdrop of rising real incomes and tighter mortgage regulation with good availability and affordability, we believe that consumers have resilience to future interest rate movements."

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