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(Sharecast News) - Taylor Wimpey said on Friday that full-year operating profit was set to be in line with market views and that it was looking to cut costs, as it cautioned that sales remain "significantly" below the third quarter of last year amid rising mortgage rates and ongoing market uncertainty.
The housebuilder said it had entered 2023 with a lower private order book than in recent years and it expects overall volumes to reduce this year.
In an update for the year to the end of December 2022, Taylor Wimpey said the business performed well, as tight operational controls and selling price discipline led to an improved operating margin.
As expected, completions were broadly in line with the previous year and the housebuilder sees full-year operating profit in line with expectations.
Total group completions came in at 14,154, versus 14,302 in 2021. UK completions were 13,773, down from 14,087. Meanwhile, the net private reservation rate was 0.68 homes per outlet per week, down from 0.91.
UK average selling prices on private completions rose 6% to £352,000, with the overall average selling price up 4% to £313,000. Taylor Wimpey ended the year with an order book of £1.94bn, down from £2.6bn.
The housebuilder also said on Friday that it has begun a consultation on a series of proposed changes which, if they go ahead, would generate annualised savings of around £20m. The costs to achieve these would be about £8m.
Chief executive Jennie Daly said: "As previously reported, we have acted quickly and decisively to address changing market conditions and continue our efforts to maximise efficiency.
"Taylor Wimpey is a strong and agile business benefitting from a high quality and well located landbank, a strong balance sheet and unwavering focus on operational execution as we continue to manage the business with discipline to deliver value for all our stakeholders. Despite near term uncertainty we remain confident that the medium to long term fundamentals of our business remain highly attractive."
Russ Mould, investment director at AJ Bell, said: "Given what Persimmon and Barratt had already said about the state of the housing market this week there wasn't much chance of Taylor Wimpey offering up a surprise.
"It's not difficult to draw a conclusion on the cause of the downturn in the property market - all three of the big housebuilders have drawn a dividing line between the period before the mini-Budget and the weeks after when the availability of inexpensive mortgages dried up overnight.
"The market is likely pleased to see Taylor Wimpey working on a rapid response to the deteriorating backdrop as it weighs the idea of taking £20m worth of costs out of the business.
"The company has the usual, if warranted, gripe about planning and along with the weak market conditions the upshot is that it's going to build less homes in 2023. Longer term this is likely to exacerbate a lack of supply in UK housing and could act as a backstop for falling prices."
