Profit down at Taylor Wimpey as cladding costs soar in half-year results

Taylor Wimpey’s pre-tax profit has dropped significantly on the back of soaring fire safety remediation costs.

Results for the half year to 30 June, published this morning, showed pre-tax profit of £99.7m, down 58% from £237.7m in the same period the year prior.

Without a £88m increase in cladding fire safety provisions, profit still would have been down, but only to £187.7m

The housebuilder attributed the increased provision to cost inflation on new tenders received and increased project delivery administration costs.

Despite the drop in profit - which came on revenue of £1.52bn, down 7.3% from £1.64bn last time - chief executive Jennie Daly said the business had delivered a “good” performance in the first half against a “relatively stable market backdrop”.

“While interest rates and mortgage rates remain high, our teams continue to work extremely hard on the ground to support our customers through the homebuying process and I would like to thank them for their ongoing commitment,” she said

Completions in the half year stood at 4,728 homes, down from 5,120 in the same period in 2023.

The housebuilder now expects to deliver full-year completions towards the upper end of its previous guidance range of 9,500 to 10,000, although this would be lower than the 10,848 posted in 2023 and the 14,154 homes it built in 2022.

It also said group operating profit for the year would be in line with current market expectations. According to the company, consensus expectation for the year’s operating profit, including joint ventures and excluding exceptional items, is £416m.

In the half year, the business recorded net private sales of 0.75, up from 0.71 in H1 2023. Sales per outlet per week in the four weeks ended 28 July, which mark the start of the seasonally quieter summer period, was at 0.64 per outlet per week, up from 0.47 the year prior.

The firms said it was seeing the benefit of market stability with high loan to value products “returning to the levels seen prior to the 2022 mini budget”.

Julie Palmer, partner at Begbies Traynor, said followers of the UK construction sector would be “pleased” by the results, with the figures “pointing to tentative signs of a turnaround in fortunes for the industry”.

“The average selling price might have decreased for Taylor Wimpey so far in 2024, but what will be of encouragement is that the company saw good demand in the spring and now views conditions as being relatively stable,” she said.

“While it’s certainly not a stellar performance, it is clear progress after what has been torrid time for housebuilders and construction companies alike.”

Taylor Wimpey also said that housing associations were struggling to commit to affordable housing deals due to “increased borrowing costs and regulatory pressures”.

>>See also: ‘We’re victims of short-term policy-making’: Interview with Taylor Wimpey boss Jennie Daly

Daly welcomed Labour’s “recognition that planning is a major barrier to economic growth” while adding that it was “early days” for the new government.

Taylor Wimpey has announced that non-executive director Scilla Grimble will be appointed chair of its audit committee.

She succeeds Humphrey Singer, who has chaired the committee since February 2018.

Taylor Wimpey is one of eight housebuilders being investigated by watchdog the Competition and Markets Authority (CMA) over alleged anti-competitive behaviour. If found guilty of wrongdoing it could face a fine of up to £420m.

The business welcomed the CMA’s report on the housebuilding market, published in February, and said it would “cooperate fully” with the newly-opened investigation.