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(Sharecast News) - UK housebuilder Taylor Wimpey said current trading was showing "some encouraging signs of improvement" but would still build fewer homes this year as 2023 profits almost halved on higher mortgage rates and weaker demand.
Pre-tax profits fell 42.8% to £473.8m, with revenue down 20% to £3.5bn. Group completions, including joint ventures, came in at 10,848 form 14,154 in 2022.
Despite the mild optimism, the company said it would build fewer homes, with 2024 UK completions excluding joint ventures to be in the range of 9,500 - 10,000.
"It is still early in the year and the macroeconomic backdrop remains uncertain, however, it is encouraging to see some signs of improvement in the market, with reduced mortgage rates positively impacting affordability and customer confidence," said chief executive Jennie Daly.
Underlying annualised build cost inflation on new tenders was now 1% compared to 8.5% a year ago.
Interactive Investor head of markets Richard Hunter said the sector was a "cyclical industry which is currently near the low point of the cycle, which tends to lead to the survival of the fittest, with Taylor Wimpey remaining in that camp".
"All things considered, Taylor Wimpey has navigated the economic storm carefully so far, with the strength of its operations leaving it well placed to benefit from any incremental improvements in the immediate future. Unlike some of its competitors, this has been recognised in a share price which has risen by 14% over the last year, as compared to a dip of 2.5% for the wider FTSE100."
"While the initial share price reaction is factoring in a lower level of revenue and profit in the absence of any sustained signs of recovery thus far, the market consensus of the shares as a buy reflects not only that Taylor Wimpey is one of the preferred plays in the sector, but also that there is some embedded confidence in longer term prospects."
Reporting by Frank Prenesti for Sharecast.com
