As Taylor Wimpey announce their company results, we explain what this means for investors.
Taylor Wimpey report solid foundations for 2020
- House builder reports 5% rise in volumes over 2019 to 16,042, with average selling price of £269,000
- Slight fall in adjusted in pre-tax profit to £821.6mn, along with margin of 19.6%
- Group expects build cost inflation of 3% over the first half of the new year but for that to decline over the second half
- Board proposed £610mn in total dividends for 2020, subject to shareholder approval
- Recommendation: We still maintain our cautious stance on the sector and Taylor Wimpey and continue with our ‘hold’ recommendation
UK homebuilder Taylor Wimpey reported a 5% rise volumes over 2019 to 16,042, with an average selling price of £269,000. There was a slight fall in adjusted pre-tax profit to £821.6 million, along with a margin of 19.6%. The group expect build cost inflation of 3% over the first half of the New Year but for that to decline over the second half. This is largely good news for shareholders as the group paid out just shy of £600 million in dividends over 2019. Overall, these results were mainly in line with expectations.
The CEO is encouraged by the good level of customer demand and the clearer political outlook as they move into the New Year. Their forward order book stands at 9,725 units and the group are emphasising the aim of continuing to improve the quality of its builds.
After a strong run, the shares are down 4% in early morning trading, reflecting on weakness in the market and possibly the slightly lower volume guidance for 2020. Management are stating that the margin will remain a key priority, with a medium term target of between 21 – 22%. We still maintain a cautious stance on Taylor Wimpey and the sector as a whole, and continue with a ‘Hold’ recommendation.
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.