Taylor Wimpey plc
Half year results for the period ended 3 July 2022
Excellent first half performance: full year results now expected to be around top end of consensus range
Jennie Daly, CEO, commented:
“I am pleased to report an excellent financial and operational performance with completions in the first half slightly ahead of expectations . This was a very good performance against a strong comparator and only possible due to the hard work of our outstanding teams across the business, and I would like to thank them for their continued commitment and efforts.
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. 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 1 .
As I set out in our Investor and Analyst Update in May, Taylor Wimpey is an outstanding business with significant potential. With a clear strategy, a renewed focus on operational excellence, and our sector leading landbank we are well positioned to build a stronger and more resilient business capable of achieving superior returns.”
Group financial performance:
|
|
H1 2022 |
H1 2021 |
Change |
FY 2021 |
|
Revenue £m |
2,076.8 |
2,196.3 |
(5.4)% |
4,284.9 |
|
Operating profit* £m |
424.6 |
424.0 |
0.1% |
828.6 |
|
Operating profit margin *† |
20.4% |
19.3% |
1.1ppt |
19.3% |
|
Profit before tax and exceptional items £m |
414.5 |
412.5 |
0.5% |
804.6 |
|
Profit before tax £m |
334.5 |
287.5 |
16.3% |
679.6 |
|
Basic earnings per share pence |
7.2 |
6.5 |
10.8% |
15.3 |
|
Adjusted basic earnings per share pence† |
9.0 |
9.3 |
(3.2)% |
18.0 |
|
Tangible net asset value per share pence† |
120.0 |
113.3 |
5.9% |
118.1 |
|
Net cash £m ‡ |
642.4 |
906.5 |
(29.1)% |
837.0 |
|
Return on net operating assets** |
24.4% |
23.0% |
1.4ppt |
24.7% |
1 As published on 2 August 2022, the Company compiled consensus expectation for full year 2022 Group operating profit including joint ventures and excluding exceptional items is c.£905 million, with a range of £873 million to £924 million
Key highlights:
- Group completions excluding joint ventures: 6,790 homes (H1 2021: 7,303) slightly ahead of guidance
- Group operating profit margin increased to 20.4% (H1 2021: 19.3% ), including some benefit from planned land sales and a strong performance from joint ventures
- On track to deliver 2022 outlet openings for further growth in 2023
- Announced 2022 interim dividend of 4.62 pence per share amounting to £163 million
- Completed a £150 million share buyback in H1 2022
- Full year Group operating profit now expected to be around the top end of the current market consensus range1
UK operating highlights:
Excellent first half performance against strong comparator:
- 50 new outlets opened in the period (H1 2021: 37), growing outlet numbers to 233 (H1 2021: 227)
- H1 2022 net private sales rate of 0.90 (H1 2021: 0.97)
- Growth in private average selling price (ASP) on completions of 3.1% (H1 2021: 6.5%)
Strong total order book representing 10,102 homes, excluding joint ventures, with a value of £2,800 million as at 3 July 2022 (4 July 2021: 10,344 homes with a value of £2,608 million)
89% forward sold for 2022 for private completions (H1 2021: 97%) as at 3 July 2022
Strong growth in short term landbank by c.6k plots to c.88k plots (H1 2021: c.82k)
Continue to lead industry in average Construction Quality Review score of 4.77 (H1 2021: 4.65), highest of the volume housebuilders
In April 2022, signed the Government's Fire Safety Pledge for Developers reaffirming our commitment that leaseholders should not have to pay for the cost of remediation and made an additional £80 million provision
Continued progress in sustainability:
- Continued strong performance by our highly experienced build teams with 62 of our Site Managers winning NHBC 'Pride in the Job' awards
- Detailed work underway to develop a net zero carbon plan to submit to the Science Based Targets initiative (SBTi) ahead of launch in 2023
- Invested £218 million in local communities via planning obligations (H1 2021: £184 million)
- Rated 4 star on TheJobCrowd and won 'Best Apprentice Company of the Year' award and top in both graduate and apprentice categories for House Building for 2022/23
- In H1 2022 we retained a 4 out of 5-star rating on Trustpilot and 92% of customers would recommend Taylor Wimpey according to the Home Builders Federation (HBF) 8-week customer survey (H1 2021: 92%)
UK current trading and outlook
The housing market continues to be resilient despite inflationary pressures in the wider economy and recent rises in the Bank of England base rate. There remains good availability of attractively priced mortgages, and we continue to see a healthy level of demand for Taylor Wimpey homes reflecting the quality of our homes and locations nationwide.
We enter the second half in a strong position. As at 31 July 2022, our total order book value was £2,893 million (2021 equivalent period: £2,712 million), excluding joint ventures, representing 10,392 homes (2021 equivalent period: 10,589 homes), of which 77% are exchanged (2021 equivalent period: 70%). As at 31 July 2022, we were c.92% forward sold for private completions for 2022 (2021 equivalent period: c.99%).
For the four weeks ended 31 July 2022 our net private sales rate is 0.57 per outlet per week. This reflects our strong order book position as we entered the second half, which has constrained availability, as well as the proactive steps we are taking to manage our order book length to deliver on pricing. Customer interest has remained strong and cancellation numbers remain at normal levels. Our forward indicators also remain positive, with appointments and enquiries continuing to be at good levels .
The sector has seen increased material and labour costs, with prevailing build cost inflation around 9-10%, h owever this is being fully offset by house price growth. Whilst market fundamentals remain robust, we are conscious of wider economic uncertainty and will remain agile in our approach across the business to optimise performance.
Looking ahead, we expect full year Group operating profit to be around the top end of the current market consensus range driven by strong average selling prices on completions that are expected to be 4-5% higher than last year. We continue to expect low single digit year on year growth in UK completions for 2022 and our margin guidance remains unchanged, with underlying year on year progression towards the 21-22% target range. Our 2022 year end net cash balance is anticipated to be around £600 million, subject to the timing of land transactions.
The land market continues to be very competitive and despite bottlenecks in the planning system we remain on track to increase our outlet numbers at the end of the year to support further growth in 2023 in line with our strategy, assuming market conditions remain stable.
We are committed to delivering outstanding homes in quality locations and excellent service to all our customers. We will continue to prioritise margin over volume growth and with our strong financial position, strength of landbank and sharp operational focus we remain well positioned to deliver superior returns and enhanced value for all our stakeholders.