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(Alliance News) - Taylor Wimpey PLC on Monday said 2021 results will be in line with its prior guidance, following strong demand for houses, and improved operating margins.
The High Wycombe, England-based housebuilding company previously had guided for operating profit including joint ventures of roughly GBP820 million, which is multiplied from 2020's profit of GBP300.3 million. However, it is not a full recovery from pre-pandemic profit, being a 3.6% decrease from 2019's figure of GBP850.5 million.
Taylor Wimpey reported "significant improvement" in operating margin in 2021, crediting a focus on optimised sales prices, as well as higher volume, which drove strong growth in operating profit. The company said that the negative impact of build-cost inflation on profit was fully offset by the price inflation of houses.
Total UK home completions were up 47% to 14,087 from 9,609 in 2020, with 18% of completions being affordable homes.
However, completions were still 12% down on the pre-Covid figure of 16,042 in 2019.
Selling prices for UK houses were up overall by 4.2% to GBP300,000 from GBP288,000 in 2020. This includes a 3% year-on-year increase for private completions, which sold on average for GBP332,000.
The value of the company's order book at the end of 2021 stood at GBP2.55 billion excluding joint ventures, slightly down from GBP2.68 billion from a year before. Sales outlets were closed ahead of schedule following strong demand. Houses are 47% forward sold for the upcoming year.
"Despite wider economic uncertainty, forward indicators continue to show good underlying demand for our homes and pricing remains positive," Taylor Wimpey said.
Net cash was GBP837.0 million on December 31, up 16% from a year before. Taylor Wimpey said it was committed to returning any excess cash to shareholders in the form of a share buyback, after the ordinary dividend has been paid. This will be confirmed when full-year results are announced on March 3.
As travel restrictions eased, demand from prospective second-home buyers in Spain returned, and 2021 saw 215 completions, up 13% from 190 in 2020, at an average price of EUR417,000, up 11% from EUR375,000 the previous year.
The company's short-term landbank stood at 85,000 plots, up from 77,000 plots a year before, while its strategic landband was 145,000 potential plots, up from 139,000.
"We have delivered an excellent performance in 2021 and expect to report full year results in line with our expectations. Market conditions remain supportive and we continue to see strong demand for our homes. Our strategy of optimising sales rates, prices and operational excellence and efficiencies is enabling us to drive a significant improvement in operating margin," said Chief Executive Pete Redfern.
"Looking ahead, we are well placed to deliver against our targets. The outlook is positive and Taylor Wimpey is particularly well-positioned. We maintain a sharp focus on delivering sustainable growth, strong profitability, and increased cash returns for shareholders over the long term."
Taylor Wimpey's stock price rose by 2.6% to 158.00 pence each in London on Monday morning.
By Elizabeth Winter; elizabethwinter@alliancenews.com
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