Trading Statement
Strategy drives significant increase in profits
Taylor Wimpey is issuing the following update on trading ahead of its full year results for the year ended 31 December 2012, which will be announced on 1 March 2013.
Overview
We expect to report 2012 full year profits at the upper end of our expectations with Group operating profit up over 40%, as we continue to deliver against our key objectives through the successful implementation of our strategy. Full year Group operating margin will be ahead of that reported for both the first half of 2012 and 2011 full year (H1 2012: 11.1%, FY 2011: 8.8%).
Pete Redfern, Chief Executive, commented:
"2012 was another year of significant progress for Taylor Wimpey with an increase of over 40% in Group operating profit. We are delivering on the strategy that we set out in 2011, including a return to UK double digit operating margin ahead of schedule. As we look forward to 2013, we are confident that we will continue to deliver against our key objectives and target further improvement."
UK current trading
Underlying market conditions have remained stable since our Interim Management Statement on 12 November 2012. While mortgage availability remains restricted, some major lenders have recently reduced their rates and we hope that this trend will continue as the Funding for Lending scheme gains traction.
Average selling prices on private completions increased by 6% to £197k, against a backdrop of broadly flat house prices in the wider market. This increase has been driven primarily by the enhanced quality of our locations. Our overall average selling price has increased by 6% to £181k (2011: £171k). Home completions increased by 7% to 10,886 (including our share of joint venture completions) up from 10,180 in 2011, of which 18% were affordable housing completions (2011: 20%). Our net private reservation rate for the full year was 0.58 homes per outlet per week (2011: 0.54) with cancellation rates below the long term average at 15.2% (2011: 15.8%).
We start 2013 in an excellent position with a substantial order book with an increase of 14% in value to £948m as at 31 December 2012 (31 December 2011: £835m), representing 5,966 homes (31 December 2011: 5,379 homes). Our focus on prioritising both short and long term margin performance ahead of volume growth remains and we are pleased to report further improvement in the margin in the order book with the growth driven by the strength of the private reservations.
We remain supportive of Government initiatives to bring forward much needed new homes. During 2012 we have supported our customers with the purchase of 1,203 homes under the Government's FirstBuy scheme and a total of 546 homes under the NewBuy and MI New Home schemes. We have been awarded an additional FirstBuy funding tranche and will continue to target the use of this funding across selected sites.