REG - Taylor Wimpey PLC - Trading Statement

Taylor WimpeyAnnouncement

13/01/2023 07:00

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RNS Number : 6028M  Taylor Wimpey PLC  13 January 2023

 

 

13 January 2023

Taylor Wimpey plc

Trading statement for the year ended 31 December 2022

 

Taylor Wimpey is issuing the following update on trading ahead of its full
year results for the year ended 31 December 2022, which will be announced on 2
March 2023.

 

Overview

Jennie Daly, CEO, commented:

"The business performed well in 2022, as our tight operational controls and
price discipline led to an improved operating margin(*†).
Despite the economic and political backdrop through the second half, I am
pleased that we expect to report full year operating profit* in line with
expectations(1)."

"As previously reported, we have acted quickly and decisively to address
changing market conditions and continue our efforts to maximise efficiency."

"Taylor Wimpey is a strong and agile business benefitting from a high quality
and well located landbank, a strong balance sheet and unwavering focus on
operational execution as we continue to manage the business with discipline to
deliver value for all our stakeholders. Despite near term uncertainty we
remain confident that the medium to long term fundamentals of our business
remain highly attractive."

2022 performance

The business performed well in 2022 due to our tight operational controls and
selling price discipline leading to an improved operating margin. As guided in
November, Group completions for the full year were broadly in line with the
prior year and we expect to report 2022 full year operating profit in line
with expectations.

Total Group completions (including joint ventures) were 14,154 (2021: 14,302).
UK home completions (including joint ventures) were 13,773 (2021: 14,087),
which included 2,920 affordable homes (2021: 2,501) equating to 21% of total
completions (2021: 18%). Our net private reservation rate for 2022 was 0.68
homes per outlet per week (2021: 0.91). The cancellation rate for the full
year was 18% (2021: 14%). In the second half of 2022 our net private
reservation rate was 0.48 homes per outlet per week (2021: 0.85) and the
cancellation rate was 23% (2021: 14%).

UK average selling prices on private completions increased by 6% to £352k
(2021: £332k) with the overall average selling price increasing by 4% to
£313k (2021: £300k). We ended the year with an order book valued at £1,941
million (31 December 2021: £2,550 million), excluding joint ventures, which
represents 7,499 homes (31 December 2021: 10,009 homes).

In the UK, we traded from an average of 232 outlets in 2022 (2021: 225). As
guided, we increased our total number of outlets to end the year with 259 (31
December 2021: 228).

Land and planning

As at 31 December 2022, our short term landbank stood at c.83k plots (2021:
c.85k). Our strategic land pipeline was c.144k potential plots (2021: c.145k
potential plots).

With a strong land position, we continued to be highly selective in our
landbuying in the second half of 2022 and, as a result, 2022 approvals were
c.7k plots, a similar level to half year 2022.

The planning environment continues to be challenging with delays and resource
pressures impacting housing land supply. Proposed amendments to the National
Planning Policy Framework announced by the Government in December 2022 include
positive measures to support improved quality of design and placemaking.
However, other changes including amendments to the approach to housing numbers
locally, a relaxation of the soundness test for plan-making and the removal of
the need for Planning Authorities to maintain a five-year supply of
deliverable housing sites could result in further delays and a shortfall in
the supply of sites. In addition, the transitional arrangements proposed are
likely to result in a meaningful hiatus in plan-making which is likely to
further constrain the availability of land for housing. We welcome proposed
amendments to the Levelling Up and Regeneration Bill to help address Nutrient
Neutrality constraints that affect more than 74 local authorities in England.

Spain current trading

The business performed well with 381 homes completed in 2022 (2021: 215) at an
average selling price of €383k (2021: €417k), with the movement in pricing
reflecting mix as we completed a greater proportion of properties in the
Alicante region, which has a lower average selling price. The total order book
as at 31 December 2022 stood at 448 homes (31 December 2021: 324 homes).

Group cash position

We ended the year with strong net cash(‡) of £864 million (31 December
2021: £837 million net cash). This was ahead of expectations largely as a
result of reduced land spend in the second half reflecting our highly
selective approach to landbuying as well as tight control on work in progress
release to reflect the lower sales rates.

Response to changing market conditions

As market conditions changed at pace in the third quarter we acted quickly and
decisively implementing even tighter cost scrutiny, significantly reducing
land commitments, and closely controlling the release of investment in work in
progress.

As we focus on maximising the efficiency of all our operations, we have begun
a consultation on a series of proposed changes which, if they go ahead, would
be expected to generate annualised savings of around £20 million, and the
costs to achieve these would be c.£8 million. This incorporates proposed
changes identified as part of our ongoing drive to increase operational
efficiency and others that, if implemented, would reduce overheads to reflect
market conditions. The proposed changes would neither affect our existing
market coverage or ability to deliver volumes from our landbank, nor our
ability to deliver high quality product and service to our customers.

Ongoing commitment to sustainability

We remain committed to the long term sustainability of the business. In 2022,
we progressed our net zero transition plan and we submitted our net zero
targets to the Science Based Targets initiative (SBTi) for independent
assessment.

Taylor Wimpey ranked fifth out of the FTSE 100 and was the highest scoring
housebuilder in the Responsibility100 Index Walk Score that assesses companies
on their commitment to key social, environmental, and ethical objectives.

We have retained our focus on build quality and are the highest rated major
housebuilder in the independently measured 2022 NHBC Construction Quality
Review (CQR).

Outlook

Although we have strengthened our outlet position during 2022 as planned, the
ongoing market uncertainty means that sales remain significantly below levels
seen prior to the rise in mortgage rates in Q3 2022. Accordingly, we enter
2023 with a lower private order book than in recent years and we expect
overall volumes to reduce in 2023. We continue to focus on sales and
supporting customers through their purchasing decisions.

Pricing in the land market is yet to reflect the changing market environment
and with a strong land position and high quality outlets, we will continue to
operate on a highly selective basis.

We remain confident that the medium to long term fundamentals of our business
remain highly attractive. With a strong balance sheet, excellent landbank and
a focus on operational execution, we continue to run the business in the
interests of all our stakeholders, maximising long term shareholder value
whilst delivering much needed high quality homes.

* Operating profit is defined as profit on ordinary activities before net
finance costs, exceptional items, and tax,

after share of results of joint ventures.

(*†) Operating margin is defined as operating profit divided by revenue.

(‡) Net cash is defined as total cash less total borrowings.

 

Note:

(1)As published on 12 January 2023, the Company compiled consensus expectation
for full year 2022 Group operating profit including joint ventures and
excluding exceptional items is c.£921 million.

-Ends-

 

For further information please contact:

Taylor Wimpey plc
 
Tel: +44 (0) 7826 874461

Jennie Daly, CEO

Chris Carney, Group Finance Director

Debbie Archibald, Investor Relations

Andrew McGeary, Investor Relations

 

FGS Global
 
TaylorWimpey@fgsglobal.com

Faeth Birch

Anjali Unnikrishnan

James Gray

 

Notes to editors:

For further information, please visit the Group's website:
www.taylorwimpey.co.uk

Follow us on Twitter via @TaylorWimpeyplc

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