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Taylor Wimpey says 2020 results will be in line with market views

(Sharecast News) – Housebuilder Taylor Wimpey said on Thursday that its 2020 results will be in line with market expectations despite the impact of the Covid-19 pandemic.
In an update for the year to 31 December, the company said total UK completions fell by around 39% to 9,609, mainly due to the impact of the shutdown on second-quarter production. The company’s net private reservation rate for the year was 0.76 homes per outlet per week, down from 0.96 in 2019.

Meanwhile, cancellation rates were above normal levels at 20%, versus 15% the year before, but normalised in the final quarter to 16%, in line with 2019. Average selling prices on private completions rose 6% to £323,000, with the overall average selling price increasing to £288,000 from £269,000 in 2019, driven mostly by change in mix, Taylor Wimpey said.

The group ended the year with a total order book valued at £2.68bn, up from £2.18bn at the end of December 2019 as demand for its homes remained strong.

Taylor Wimpey said that from 16 December, it began taking reservations under the new phase of the Help to Buy scheme and, up to 31 December, made 650 reservations under the new scheme for completions from the second quarter of 2021.

Chief executive Pete Redfern said: “Our 2020 results will be in line with market expectations. While operations were impacted by the shutdown period in the second quarter, the subsequent return to near normal construction capacity and continuing resilience of the UK housing market enabled sales and production to recover strongly towards the end of the year. We increased new investment in land in the second half of the year as high quality land became available at attractive margins.

“We start the year with an excellent order book and ongoing focus on strengthening the business and improving margins. This will position Taylor Wimpey well to deliver strong and reliable returns for our stakeholders over the medium term.”

Canaccord Genuity said: “Overall, it is a solid update and the tone is a bit more positive on the outlook than the slightly more cautious tone communicated by some peers recently. Consensus is unlikely to change materially but looks very well supported. Valuation looks relatively attractive versus the sector average.”

Canaccord rates the stock at ‘buy’ with a 190p price target.

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