Bullish Taylor Wimpey eyes boost from Help to Buy

HOUSEBUILDER Taylor Wimpey has reported a buoyant start to the key spring selling season and has forecast that fresh funds from Holyrood for the Help to Buy scheme will create market momentum in Scotland.
Peter Redfern: confidence is highPeter Redfern: confidence is high
Peter Redfern: confidence is high

It came as the company posted a 67 per cent increase in underlying pre-tax profits to £450 million in 2014, on revenues up 17 per cent at £2.7 billion.

Amid other signs of a continuing revival in the construction industry, the Markit/CIPS Construction purchasing managers index published yesterday rose from 59.1 in January to 60.1 in February. It was its highest reading in four months.

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Peter Redfern, Taylor Wimpey’s chief executive, said: “The beginning of the spring selling season has seen trading at the better end of expectations.

“Customer confidence is high, with good levels of employment and an affordable mortgage environment.”

Taylor Wimpey completed 12,454 homes in the UK last year, up 6.5 per cent, with an 11.5 per cent increase in total average selling price to £213,000. Operating profit margins jumped more than 4 per cent to 17.9 per cent.

The company said it anticipated a bounce in Scottish sales this spring as more funding for the Help to Buy scheme becomes available from the Scottish government.

Finance director Ryan Mangold said: “The Scottish housing market continues to do OK. We have 30 active sites in Scotland. The Scottish participation in the Help to Buy scheme is quite high compared to other parts of Britain. Funds dried up a bit but we feel sales should improve in April and May when next year’s funding kicks in.”

A difficult labour market and the challenge of delivering its homes on time meant the company’s customer satisfaction rate fell to 87 per cent from 90 per cent a year earlier. However, it said that was still high compared to historical levels.

“We are not happy about that. Partly it was due to the pace [of work] stepping up over 2013 and 2014, leading to a squeeze on sub-contractors to do the work,” Mangold said.

Building costs increased by 5 per cent last year but Taylor Wimpey said the return to more normal market conditions should ease the pressure this year.

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The finance director added that Taylor Wimpey welcomed the prevention of a housing market “bubble” last year by the authorities’ Mortgage Market Review and new rules introduced by the Bank of England imposing tighter affordability checks on borrowers.

“It definitely took a lot of steam out of the market,” he said. Taylor Wimpey increased its dividend for 2014 to 1.56p a share, from 0.69p the previous year.

The company returned £49.7m to shareholders last year, and plans to return a further £250m in July.