LONDON (Alliance News) - Taylor Wimpey PLC on Wednesday said its pretax profit surged in the first half of 2015, driven by more housing completions and better selling prices, prompting the company to say it will return a further GBP300 million in cash to shareholders.
The FTSE 100-listed housebuilder said its pretax profit for the first half to June 28 was GBP237.2 million, up from GBP197.3 million a year earlier, as revenue for the group increased to GBP1.34 billion from GBP1.19 billion.
Taylor Wimpey said its operating margin improved by 310 basis points in the half to 19.2% from 16.1% a year earlier, while its return on net operating assets rose by 540 basis points to 23.2% from 17.8%.
On the back of the results, the company said it has proposed a further GBP300 million cash return to its shareholders, increased from the GBP250 million it returned last year. It will pay an interim dividend of 0.49 pence per share, up from 0.24 pence last year.
The stock is up 1.1% at 184.63 pence Wednesday afternoon.
Taylor Wimpey said it sold 5,842 homes in the UK in the first half, up from 5,695, at an average selling price of GBP225,000, up from GBP206,000, as the UK's housing market proved resilient in the period and registered growth. Its current forward order book rose to 8,120 homes at the end of the half, up from 7,587 a year earlier, with the value of its forward sales at GBP1.86 billion, up from GBP1.58 billion.
The company said its landbank remains strong at 77,000 plots, with more than 50% sourced from its strategic land pipeline. In the half, Taylor acquired 3,620 plots in the UK short-term land market and converted 5,666 plots from its strategic pipeline.
The group said the housing market in the UK has benefited from a significant increase in consumer confidence since the General Election in May, which had constrained activity in the market somewhat in the first four months. Mortgage availability and rates also improved post the election, driving a stronger second quarter for Taylor Wimpey which has continued into July. Sales rates since the start of July have been ahead of expectations and its sales prices have increased further.
Taylor Wimpey's comments came as the Bank of England reported that UK mortgage approvals increased more than expected in June and secured lending climbed the most since 2008.
The central bank said number of loan approvals for house purchase totalled 66,582 in June, up from 64,826 in May. It was forecast to increase marginally to 66,000. IHS Global Insight Economist Howard Archer said housing market activity is now clearly on the up.
Taylor Wimpey was slightly more cautious, saying following a strong selling season in spring and early summer, it anticipates sales rates will moderate in the second half of 2015, in line with traditional trading patterns. The company sees closing the year with a rate in the range of 0.70 to 0.75 private homes sold per site per week, compared to the 0.78 it registered in the first half.
The company also said that it does not expect a rise in interest rates by the BoE to significantly disrupt the housing market, dependent on the size of the hikes to come and on the basis that low unemployment and wage growth will support the market.
Taylor Wimpey added that while build cost pressure has continued in the first half, particularly weighted towards labour costs, this pressure did reduce in the period.
"We have used the opportunity of a stable and positive housing market to make significant progress towards our medium term financial and quality objectives. We are confident of achieving the three year financial targets that we established in 2014, and continue to invest in recruiting and developing our people and enhancing the quality of our homes," said Taylor Wimpey Chief Executive Peter Redfern.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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Taylor Wimpey (TW.)
