Taylor Wimpey profit ‘at upper end of forecasts’ after year of cost-cutting

Taylor Wimpey said it on track to post operating profit of £470m this year, which is at the upper end of its previous forecast.

The housebuilder, in a trading update today, said it has been able to generate operating profit towards the upper end of its £440m to £470m range due to its focus on “optimising price and sharp cost discipline”.

The figure is however sharply down on the £923m in operating profit posted the previous year amid ‘weak consumer confidence’.

Taylor Wimpey also said it is on track to build between 10,000 and 10,500 homes this year, meaning it has hit the upper end of a previous forecast. However, as previously reported, this is nearly a third down on the 14,154 built last year.

Taylor Wimpey said it has “acted decisively and proactively” to mitigate risk by controlling costs and delivering efficiencies across the business”.

The firm in March announced it was closing its Oxfordshire business as part of a restructuring and redundancy process to save around £20m a year.

Taylor Wimpey’s net private sales rate for the year to date is 0.63, down slightly on 0.74 the previous year.

Analysts responded to the update by suggesting the market downturn may have bottomed out.

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Peel Hunt said the “improving position on build costs plus a lack of further pressure on selling prices should be helpful to margins”

They said: “While conditions remain difficult it is not going to be a sharp bounce back, but it increasingly looks like we are past the darkest days for the sector.”

Andy Murphy, director at Edison Group said Taylor Wimpey “seems to have successfully ridden out the storm.”

He said: “With the stalling of mortgage rates and inflation, the continued undersupply of housing in London and the South East, and a slight rise in house prices in October, the residential property sector can end 2023 with cautious optimism.”