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Taylor Wimpey sees 2019 volumes similar to 2018 levels given current market conditions

The housebuilder said it ended 2018 with an "excellent" total order book valued at £1,782mln as at 31 December 2018, up from £1,628mln a year earlier, excluding joint ventures
Taylor Wimpey said its year-end order book represents 8,304 homes, up from 7,136 homes a year earlier, with the growth due to affordable housing

Taylor Wimpey PLC (LON:TW.) saw its shares rise on Wednesday as the housebuilder said it will report full-year results in line with expectations and reiterated its previous guidance for 2019 volumes to be similar to 2018, given current market conditions, with significant volume growth potential for 2020 onwards.

In a full-year trading update, the FTSE 100-listed group said its total home completions increased by 3% in 2018 to 14,947, including joint ventures, up from 14,541 in 2017.

READ: Housebuilder Taylor Wimpey seeing “some signs of customer caution” in UK property market

The firm pointed out that selling prices on private completions increased by 2% to £301,000, up from £296,000 in 2017, with the overall average selling price remaining flat at £264,000.

It added that trading was robust despite, as previously reported, seeing some signs of increasing customer caution towards the end of 2018 in London and the South East.

Taylor Wimpey said it ended 2018 with an "excellent" total order book valued at £1,782mln as at 31 December 2018, up from £1,628mln a year earlier, excluding joint ventures.

The company said its year-end order book represents 8,304 homes, up from 7,136 homes a year earlier, with the growth due to affordable housing.

Solid forward sales indicator

It added: “Whilst it is clearly too early to give a definitive view on 2019 trading, we continue to see solid forward sales indicators and start the year with a very strong order book.”

The group said it remains committed to returning £600mln to shareholders by way of total dividend in 2019.

The company pointed out that it ended the year with a strong net cash balance of around £644mln, up from £511.8mln net cash, ahead of expectations, due to the timing and quantum of land investment.

Pete Redfern, Taylor Wimpey’s chief executive, commented: “Despite wider macroeconomic uncertainty, the housing market remained stable during 2018 and we had a good trading performance.

“We are continuing to deliver against our strategy and ended the year in a positive position, underpinned by our strong order book and balance sheet.”

He added: “As we enter 2019, we maintain our guidance for stable volumes although are mindful of market sensitivity.

“We are confident that our focused strategy of managing the business through the cycle and driving further operational improvements will enable us to continue to deliver a high-quality product and service to our customers, long term value for shareholders and growth into 2020."

Taylor Wimpey said it will report its full-year results for the year ended 31 December 2018 on 27 February 2019.

In early morning trading, Taylor Wimpey shares were 6% higher at 148.90p.

Caution remains

Helal Miah, investment research analyst at The Share Centre commented: “With the strong order book they foresee 2019 volumes to be similar to 2018 despite the uncertain political and macro-economic environment. This view is supported by buyer interest and the availability of a wide range of competitive mortgage products while employment levels remain high.

“However, there certainly has been a slow-down in the rate of revenue growth from a few years ago and labour and material cost inflation has become more prevalent. Despite the good underlying numbers reported by the sector, the share prices are reflecting the increased risk to the sector from the political and economic uncertainty.”

He concluded: “We still maintain our cautious stance on the sector and Taylor Wimpey and continue with our ‘hold’ recommendation for investors looking for growth and willing to accept a medium to higher level of risk.”

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