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Taylor Wimpey – Profit Targets Remain In-tact

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Taylor Wimpey plc (LON:TW) saw total group completions for the year down slightly from 14,302 to 14,152, with the UK making up the lion’s share of these at 13,773 completions.

The group’s overall average selling price increased by 4% to £313,000 this year.

Full-year net private reservation rates fall from 0.91 homes per outlet per week to 0.68 in 2022. Reservation rates slowed more significantly, to 0.48, during the second half of the year.

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The order book value fell from £2.6bn to £1.9bn year on year, with ongoing market uncertainty and a rise in mortgage rates being blamed as the cause of this decline.

Cancellation rates for the full year rose from 14% to 18%.

As of the end of 2022, the short-term landbank stood at roughly 83,000 plots, with a total strategic pipeline of 144,000 plots. These numbers were broadly flat compared to 2021 figures.

Taylor Wimpey finished the year with net cash of £864m, up from £837m last year, which was largely a result of reduced land spend.

The shares were broadly flat following the announcement.  

Taylor Wimpey's Earnings

Aarin Chiekrie, Equity Analyst at Hargreaves Lansdown:

 “Taylor Wimpey’s trading update reassured investors that full-year profits will meet previous guidance, and that operating margins have improved. Encouraging words given the housing market stumbled at the back end of 2022 as it was hit by spiking mortgage rates.

 

Concerns about further rate hikes and elevated levels of inflation have caused consumers to think twice about committing to buying a new home. Taylor Wimpey felt the impact of this as it saw its order book value fell from £2.6bn to £1.9bn year on year – representing 7,499 homes.

We think things will get worse before they get better, and that the group is likely to see further declines in reservation rates as ongoing market uncertainty takes its toll.

Taylor Wimpey finished the year with an even bigger cash pile than last year. This large war chest coupled with a strong balance sheet should help the group to ride out the near-term turbulence. But only time will tell whether it’ll be enough to sustain the group if tough times persist.”