Taylor Wimpey PLC (LSE:TW.) expects 2022 operating profit to be at the upper end of consensus estimates as the UK housing market continues to defy the economic slowdown.
The homebuilder’s chief executive Jennie Daly said full-year results will be at “the top end of the consensus range” due to ‘strong average selling prices’ that are expected to be 4-5% higher than last year.
“While we recognise and are closely monitoring wider macro-economic and political uncertainty, housing market fundamentals remain positive, supported by an enduring supply and demand imbalance and good availability of attractively priced mortgages,” Daly said. “Demand for our homes remains strong and we now expect full year group operating profit to be around the top end of the current market consensus range.”
The consensus is Taylor Wimpey will generate group operating profit (excluding exceptional items) of £905mln in 2022, with a spread of £873mln to £924mln.
The housebuilder grew its pre-tax profit by 16.3% to £334.5mln in the first half. Turnover fell 5.4% year on year to almost £2.08bn in the first half of 2022, according to its half-year results to 3 July.
The housing and construction market suffered from supply constraints and shortages in the first half, but Taylor Wimpey said the market continues to be ‘resilient despite inflationary pressures’ including a rise in interest rates.
The company faced ‘increased material and labour costs’ in the first half, with cost inflation of about 9-10%, but said this was offset by house price inflation.
The homebuilder completed 6,790 homes, slightly ahead of guidance, but fewer than the 7,303 built in the first half of 2021.
Its order book stands at 10,102 homes, not including joint ventures, totalling £2.8bn of potential earnings as of 3 July.
Orders are slightly behind this time last year in terms of numbers (down from 10,344) but ahead in terms of value from £2.6bn on 4 July 2021.
Taylor Wimpey said it still expects ‘low single digit’ year-on-year growth in UK house-builds this year.
So far this year, it has opened 50 new outlets, growing the total number to 233. It also completed a £150mln share buyback in the first half.
Its margin guidance remains unchanged, targeting incremental progression towards 21-22% and it is aiming for net cash balance of £600mln at the end of the year.
It has declared an interim dividend of 4.62p per share.