LONDON (Alliance News) - Housebuilder Taylor Wimpey PLC signaled further profit growth Thursday, saying private reservation rates and average selling prices are continuing to rise, and uncertainty about the outcome of the UK election was failing to dent consumer confidence.
In a trading update, the company said it has achieved an average private net reservation rate of 0.76 sales per outlet per week so far in 2015, up from 0.74 sales per outlet in the same period in 2014. Average selling prices of homes in its private order book are up 14% on the year to about GBP282,900, from GBP249,100. It is currently operating from 302 outlets, the same number as a year ago.
It said its total order book also remains strong at 8,200 homes, compared with 8,231 homes at the same stage in 2014. It is up 24% since the end of 2014. The total order book value is up by 12% on the year to about GBP1.9 billion, from about GBP1.7 billion at the same stage of 2014.
"As at 19 April 2015 we are 67% forward sold for 2015 completions, positioning us well for the remainder of the year and beyond. We are confident that we will continue to drive further sustainable growth and we are on track to deliver good progress towards all of our medium term targets in 2015," the housebuilder said.
"The uncertainty surrounding the general election outcome has not impacted customer confidence, and underlying demand remains high. We have had a strong first quarter in a positive trading environment, underpinned by good mortgage availability and employment prospects," it added.
Taylor Wimpey also said the short-term land market has remained benign, and it has sourced land at margins similar to those it secured in 2014. Its short-term land bank at the end of March stood at about 78,000 plots. Its strategic land pipeline stood at about 109,000 potential plots.
Taylor Wimpey confirmed it will pay a final maintenance dividend of 1.32 pence a share for 2014, up from 0.47p a year earlier, giving a total maintenance dividend of 1.56p a share for last year, up from 0.69p in 2013. It's also going to pay a special cash dividend in July of 7.68p a share, as previously announced, up from 1.54p in July 2014.
Analysts were positive about the update, although Taylor Wimpey's shares were down 0.3% at 163.80 pence Thursday morning, having risen to a fresh seven-year high of 166.90 pence in early dealings.
Jefferies said it still expects Taylor Wimpey to deliver a 35% increase in pretax pre-items profit in 2015, and it thinks the risks it won't achieve this have fallen. The broker, which has a Buy rating on the stock and a 189.00 pence price target, still expects Taylor Wimpey's pretax pre-items profit to rise to GBP610 million in 2015, from GBP450 million in 2014.
Liberum said the update shows that Taylor Wimpey's sales rates have improved on the year, which points to a strong March and April. The forward sales rate of 67% should also insulate the housebuilder from any post-election nervousness, the broker added. It also has a Buy rating on the stock, and a 165 pence price target.
Shore Capital is also keeping its earnings estimates for Taylor Wimpey unchanged following the update, and is happy to remain at Buy even though the shares are above its target price of 160p, "as we still believe that we are entering a ratings upgrade cycle that has the scope to push fair value estimates up by 15-20%".
It expects the company to report a pretax profit of GBP596 million in 2015, which it says is above the consensus forecast of GBP586 million.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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Taylor Wimpey (TW.)