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Taylor Wimpey sales resilient despite seeing “increasing customer caution”

The FTSE 100 housebuilder said operating margins for the full year would be “slightly lower” than it had indicated at the half-year but sales volumes “slightly higher”

Taylor Wimpey - houses
The sales rate slipped from 1.0 in the first half to a still industry-leading 0.92 in the third quarter

Taylor Wimpey PLC (LON:TW.) said it has seen “increasing customer caution” in some areas of the housing market but continued high sales rates gave it confidence that conditions were proving “resilient”.

The FTSE 100 housebuilder said operating margins for the full year would be “slightly lower” than it had indicated at the half-year but sales volumes “slightly higher”, meaning results were broadly in line with internal expectations.

Despite guiding to weaker margins, a “softening” in cost pressures over recent months was reported, with the company saying it expects inflation “will reduce as we go into 2020”. 

With Taylor Wimpey operating on an average of 252 outlets in the year to date, the rate of sales per outlet per week has slipped from 1.0 in the first half of the year to a still industry-leading 0.92 in the third quarter, up from 0.77 this time last year. 

Cancellation rates for the year to date remain low at 15%.

“The UK housing market remained resilient through the second half of 2019, continuing to benefit from strong underlying demand, low interest rates, a competitive mortgage market and the government's Help to Buy scheme,” the company said in its statement. 

While forward indicators for sales have remained healthy, the company said, “we have seen some increasing customer caution, particularly in the higher-priced markets of London and the South East, as a result of the ongoing political and economic uncertainty”.

Management were reassured by the strong order book of 10,433 houses and flats as at 10 November 2019, worth around £2.7bn, up 6% by number and 12.5% by value from a year ago.

With cash continuing to flow and a bank balance of around £500mln pencilled in for the year end, chief executive Pete Redfern reiterated his commitment to returning circa £610mln by way of total dividends to shareholders in 2020.

Quick facts: Taylor Wimpey

Price: 174.85 GBX

LSE:TW.
Market: LSE
Market Cap: £57.32 m
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