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(Sharecast News) - House builder Taylor Wimpey said it expected full-year profits to be at the upper end of forecasts as it reported a rise in interim earnings, driven by strong selling prices.
The company on Wednesday said pre-tax profits rose 16.3% to £334.5m, despite a 5.4% fall in in revenue to £2bn, as slashed costs and widened margins.
Completed homes in the first six months of the year topped 6,790, ahead of guidance.
It also said it was giving most of its employees £1,000 on top of their salaries to help them cope with rising fuel costs this winter. The payments will be given to workers on salaries of up to £70,000, meaning that about 90% of the workforce is eligible.
"We have been closely monitoring the impact of rising inflation and the predicted increase in fuel bills this winter on the cost of living for our employees," Taylor Wimpey said, adding that it had been reviewing wages to "ensure competitive levels of pay, alongside our excellent benefits package".
"Looking ahead, we expect full-year group operating profit to be around the top end of the current market consensus range driven by strong average selling prices on completions that are expected to be 4-5% higher than last year," the company said.
Chief executive Jennie Daly hailed an "excellent" start to the year for the firm against a turbulent economic backdrop.
"While we recognise and are closely monitoring wider macro-economic and political uncertainty, housing market fundamentals remain positive, supported by an enduring supply and demand imbalance and good availability of attractively priced mortgages."
Richard Hunter, head of markets at Interactive Investor said the results highlighted the "yawning gap between trading performance and share price performance".
"The sector has been under pressure following the removal of the stamp duty holiday and a revamped Help to Buy scheme, with overarching concerns emanating from the general outlook for the UK economy," he said.
"Trading is strong and the outlook upbeat, as evidenced by the market consensus of the shares which remains resolutely positive, coming in at a strong buy. Share price performances have far from reflected this optimism across the sector as a whole, however."
"Despite the initially positive reaction to the numbers, Taylor Wimpey shares have declined by 28% over the last year, as compared to a gain of 4.3% for the wider FTSE100, underlining that caution rather than hope remains the watchword for this beleaguered sector at present."
Reporting by Frank Prenesti at Sharecast.com
