Trading Statement

RNS Number : 4211V

Taylor Wimpey PLC

14 January 2013

 



14 January 2013

Taylor Wimpey plc

Trading Statement for the year ended 31 December 2012

Strategy drives significant increase in profits

Taylor Wimpey is issuing the following update on trading ahead of its full year results for the year ended 31 December 2012, which will be announced on 1 March 2013.

Overview

We expect to report 2012 full year profits at the upper end of our expectations with Group operating profit up over 40%, as we continue to deliver against our key objectives through the successful implementation of our strategy. Full year Group operating margin will be ahead of that reported for both the first half of 2012 and 2011 full year (H1 2012: 11.1%, FY 2011: 8.8%).

Pete Redfern, Chief Executive, commented:

"2012 was another year of significant progress for Taylor Wimpey with an increase of over 40% in Group operating profit.  We are delivering on the strategy that we set out in 2011, including a return to UK double digit operating margin ahead of schedule. As we look forward to 2013, we are confident that we will continue to deliver against our key objectives and target further improvement."

UK current trading

Underlying market conditions have remained stable since our Interim Management Statement on 12 November 2012. While mortgage availability remains restricted, some major lenders have recently reduced their rates and we hope that this trend will continue as the Funding for Lending scheme gains traction.

Average selling prices on private completions increased by 6% to £197k, against a backdrop of broadly flat house prices in the wider market. This increase has been driven primarily by the enhanced quality of our locations. Our overall average selling price has increased by 6% to £181k (2011: £171k). Home completions increased by 7% to 10,886 (including our share of joint venture completions) up from 10,180 in 2011, of which 18% were affordable housing completions (2011: 20%). Our net private reservation rate for the full year was 0.58 homes per outlet per week (2011: 0.54) with cancellation rates below the long term average at 15.2% (2011: 15.8%). 

We start 2013 in an excellent position with a substantial order book with an increase of 14% in value to £948m as at 31 December 2012 (31 December 2011: £835m), representing 5,966 homes (31 December 2011: 5,379 homes). Our focus on prioritising both short and long term margin performance ahead of volume growth remains and we are pleased to report further improvement in the margin in the order book with the growth driven by the strength of the private reservations.

We remain supportive of Government initiatives to bring forward much needed new homes.  During 2012 we have supported our customers with the purchase of 1,203 homes under the Government's FirstBuy scheme and a total of 546 homes under the NewBuy and MI New Home schemes. We have been awarded an additional FirstBuy funding tranche and will continue to target the use of this funding across selected sites.

Land portfolio, planning and outlets

Our strategy to actively manage our level of land investment in line with the housing market cycle remains unchanged. During 2012 we continued to see a significant number of attractive opportunities in the market. Our strong balance sheet allows us to participate where we judge best value in each of our local markets and against our strict financial criteria, whilst the quality and scale of our landbank allows us to be selective and maintain our consistent, disciplined approach to land acquisition. We approved the purchase of 14,172 new plots on 112 new sites during 2012 (FY2011: 11,756 plots on 106 new sites). In parallel, we have continued to add to our extensive strategic land portfolio, both by the promotion of existing sites through the planning process and by the targeted addition of new plots.

We enter 2013 with 328 outlets (31 December 2011: 314). We continue to deliver enhanced returns on newly acquired sites through our ability to optimise planning consents and value engineer sites prior to opening. Subject to ongoing stable market conditions, we anticipate a natural growth in completions in 2013, as our strong order book, land acquisition strategy and planning approvals on strategic sites organically increase our outlet numbers.

Spain Housing

The continued wider macro economic uncertainty has contributed to the challenging market conditions in Spain. Despite this backdrop, we have completed 156 homes (2011: 109) at an average selling price of £189k (2011: £238k), with the reduction in selling price primarily due to mix. The Spanish housing business made a small profit during 2012.

Group financial position

Our balance sheet is strong and we have taken positive steps throughout 2012 to further improve our capital efficiency. We have bought a total of £15.2m of 10.375% Senior Notes due 2015 during the year, reducing the amount outstanding to £149.4m at 31 December 2012 (31 December 2011: £164.6m).

We expect net debt at 31 December 2012 to be c.£60m, which is below our previous guidance (1 July 2012: £135.2m) as a result of the timing of land payments and strong operational performance. We continue to monitor carefully the combined use of land creditors and debt.

Outlook

Two weeks into 2013, consumer sentiment towards the housing market is more positive than we have seen in recent times. Clearly it is too early to judge the market for the year, but we maintain a positive, although cautious view in the short term.  The successful implementation and ongoing execution of our value-focused strategy has allowed us to build on the improvements which we have delivered consecutively over the last three years. Our well positioned sales outlets, high quality land portfolio, increased order book and strong balance sheet give us confidence to target further improvements and create increased value for our shareholders in 2013 and beyond.

-Ends-

For further information please contact:

Taylor Wimpey plc                                          Tel: [phone]

Pete Redfern, Chief Executive

Ryan Mangold, Group Finance Director

Debbie Sempie, Investor Relations

RLM Finsbury                                                  Tel: [phone]

Andrew Dowler 

Notes to editors:

Taylor Wimpey plc is a residential developer with operations in the UK and Spain. We aim to be the leading developer for creating value and delivering quality.

For further information, please visit the Group's website:

http://plc.taylorwimpey.co.uk

 

END

 

 

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