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LONDON (Alliance News) - Taylor Wimpey PLC Tuesday upgraded its operating margin growth forecast for 2014 and reiterated its medium-term forecasts, saying the recent slowdown in the UK housing market meant it is now growing at a steady and sustainable rate.
In a statement, the housebuilder said it now expects its operating margin to grow 400 basis points in 2014.
"We are still operating in the early stages of the housing cycle. The UK housing market continues to show good signs of recovery and the pace of growth has moderated to a more healthy and sustainable level. With a reduced risk of interest rate increases in the near term, but also with tighter but sensible regulation, we believe that UK house prices are most likely to closely reflect inflation and recovery in the underlying UK economy," the company said.
It said its sales rates for the year to date stand at 0.66 sales per outlet per week, slightly ahead of the 0.65 rate it reported for the same period in 2013. For the second half to date, sales rates of 0.60 are around 5% below 2013, it added.
Cancellation rates of 13% for the year to date remain historically low and flat on the year.
Taylor Wimpey said it is fully sold for its targeted 2014 completions and is building its order book for 2015, with 25% of 2015 completions already forward sold.
Its current total order book represents 7,814 homes, up from 7,557 a year ago, and stands at GBP1.7 billion excluding joint ventures, up from GBP1.5 billion. Private average selling prices in the order book are up 19% year on year, it added.
"As we expected, build costs have increased in line with our guidance of around 5% year on year as the sector adjusts to increased demand from a more robust housing market. These build cost increases continue to be more than offset by sales price inflation," it said.
The company's operating margin in 2013 was 13.6%.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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