After Covid slump, housebuilder bounces back with record gains
BOOMING demand for new homes has helped housebuilder Taylor Wimpey almost triple revenues, bounce back to profit, and build a record number of houses in the first half of the year.
Investors sent shares up 6 per cent as the Buckinghamshire-based group, which operates across east and west Scotland, said low interest rates, good mortgage availability and Government support for homebuyers meant the UK housing market was performing strongly across all its geographies.
It built 7,303 homes in the six months to July 4, up from 2,771 in the first half of 2020, which had been “heavily impacted” by the Covid-19 shutdown.
Revenues jumped more than 190% to £2.2 billion from £755 million in the same period last year. This helped Taylor Wimpey report a pre-tax profit of £287.5m for the six months, compared with a pre-tax loss of £39.8m for the first half of 2020.
The pandemic had helped to fuel demand as people reviewed their living situations, analysts said.
“Another set of strong results from the UK’S housebuilders adds to mounting evidence that the pandemic has been a tailwind for the housing market,” said Laura Hoy, equity analyst at Hargreaves Lansdown.
“Turns out being locked inside for months on end has caused many people to re-evaluate their current living situation. Add to that the rising popularity of working from home, and you have the perfect excuse to move house.”
Taylor Wimpey said it now expected full-year group operating profits for 2021 to be around £820m, above the top end of analysts’ expectations.
The 13,200 to 14,000 builds it expects to complete for the full year are also “towards the upper end” of its guidance range.
Taylor Wimpey chief executive Pete Redfern said: “We have delivered a record first-half performance and a strong operating profit margin performance of 19.3%, which reflects tight cost discipline as well as higher completions in the period.”
Last June, the group announced it was raising £500m from its shareholders to buy land while Covid19 had depressed prices, reduced competition and created opportunities.
“We have moved decisively to source and approve a quality land pipeline in a very attractive land market, equating to around double the plots sourced and approved in an average year,” the group said of the last 12 months.
About 14,500 plots got planning approval in the first half, up from around 5,200 in the first half of 2020.
The group said it had net cash in the bank of £906.5m at the half-year stage, up from £497.3m last July, due to the timing of land payments. It is handing back £151m to shareholders by way of an interim dividend of 4.14 pence per share.
The housebuilder said it had also acted decisively in March 2021 by announcing it was paying out £125m to fund the replacement of cladding and other fire safety work on all its developments across the UK built in the past 20 years. The work will make apartment buildings safe and mortgageable in line with latest industry guidance, following the 2017 fire at Grenfell Tower in west London.
On climate change, the group said it was rolling out an environmental strategy and piloting approaches to carbon emissions reduction on construction sites, nature enhancement, waste, and indoor and outdoor air quality.
Earlier this year, Taylor Wimpey launched science-based carbon reduction targets to cut emissions intensity from its operations by 36% by 2025, and from its supply chain and customer homes by 24% by 2030.
The group employs around 5,400 people on average across its 23 regional businesses. Projects in Scotland include a development of 535 new homes in Glenboig, North Lanarkshire, 227 new homes on the western edge of East Kilbride, and a development of 69 affordable homes in East Calder.
Shares closed up 10.15p at 175p.