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We are one of the UK's largest residential developers. As a responsible developer we are committed to working with local people and communities.



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Taylor Wimpey Fundamentals (TW.)

on the other hand, it is also a valid opinion that tough austerity was the best option at the time, and arguably, even now has proved to have been generally correct

Re Jefferies,

Broker demolishes housebuilder 'buy' case

Trading Statement

Overview

Pete Redfern, Chief Executive, commented:

"As we enter 2015, we are encouraged by the more balanced market conditions, with a lower rate of price growth, which should create a healthy and more sustainable housing market. This is good news for homebuyers and underpins our confidence in developing and growing our business.

Taylor Wimpey starts the year in an excellent position and whilst the global economic outlook is uncertain, in the UK we have an environment of sensible mortgage regulation and a reduced risk of UK interest rate increases in the near term. Overall we believe that the market and political risk for our sector is balanced and will allow Taylor Wimpey to continue to make significant progress towards our medium term targets."

UK current trading

During the second half of 2014 we saw a return to a healthier and more balanced housing market after a very strong first half of the year. The UK housing market continues to grow and, since our interim management statement on 11 November 2014, we have continued to see positive signs, with prices increasing slowly as previously described. This is underpinned by solid consumer confidence and good mortgage availability and affordability.

Against this backdrop, and in line with our strategy, we have continued to grow steadily and sustainably, delivering increased completions and creating additional value.

In 2014, total home completions increased by 6% to 12,454 (including our share of joint venture completions), up from 11,696 in 2013, of which 17% were affordable home completions (2013: 18%). Our net private reservation rate for the full year was 0.64 homes per outlet per week (2013: 0.62) with cancellation rates of 14% still at low levels (2013: 13%).

Average selling prices on private completions increased by 11% to £234k (2013: £210k). This increase is both a result of our underlying shift to better quality locations and capturing market sales price increases. Our overall average selling price has increased by 12% to £213k (2013: £191k).

We enter 2015 with a record order book, which has increased in value by 12% to £1,397 million as at 31 December 2014 (31 December 2013: £1,246 million), excluding joint ventures, driven largely by the strength of private reservations. This order book represents 6,601 homes (31 December 2013: 6,627 homes). We view this as the optimum size for the business at this point in the cycle.

Land portfolio, planning and outlets

The short term land market remained balanced and disciplined throughout 2014. As stated previously, whilst we continue to source and invest in short term value-creating land opportunities at similar margins to 2013, we have reached our optimal short term landbank size and so our strategy is to maintain, rather than grow, this proportion of our landbank.

The strength and quality of our strategic land pipeline is a key differentiator for Taylor Wimpey. We are particularly pleased to report a record performance during 2014, where we converted over 9k plots from the strategic pipeline into the short term landbank.

We enter 2015 with 305 outlets (31 December 2013: 314), with the decrease due to faster outlet closings in a healthier market and the time required to meet additional planning permission requirements to start working on site. We expect the total number of outlets to increase in 2015, reflecting our success in the land market and our continued focus to get newly acquired sites and phases opened properly and efficiently.

Spain current trading

The Spanish market remains stable. Our newly acquired sites performed well during 2014 due to their better quality locations and have driven a significant improvement in performance. During 2014, we completed 164 homes (2013: 118) at an average selling price of €250k (2013: €229k). The total order book as at 31 December 2014 stands at 233 homes (31 December 2013: 195 homes). The Spanish business will deliver an improved operating profit* for 2014 (FY 2013: £0.1 million operating profit*).

Group financial position

The Group will report an improved full year operating margin of slightly over 400 basis points ahead of FY 2013 operating profit* margin (FY 2013 13.6%).

We are pleased to report that we ended the year with net cash of c.£113 million, which is slightly ahead of expectations and significantly ahead of the prior year (31 December 2013: £5.4 million net cash). This is largely as a result of outperformance in underlying trading, whilst at the same time continuing to invest in our landbank as we approached our optimal scale.

Outlook

We welcome the Government's Autumn Statement announcement of a reform of Stamp Duty Land Tax payments to a more progressive system, which we believe will help more homebuyers to get onto and move up the property ladder. With the upcoming General Election in May, housing continues to remain high on the political agenda with recognition of the importance of housebuilding to the economy and the need for more quality homes in the UK. Whilst the macro economic outlook is uncertain, with a reduced risk of UK interest rate increases in the near term and sensible mortgage regulation, we believe that the market and political risk for our sector is balanced as we enter 2015, and the outlook remains positive.

We start the year in an excellent position, with our active sites and future outlets in great quality locations where people want to live. Our strategy has been and remains to deliver ongoing and sustainable increases in volume and margin over the medium term. We are confident that in current market conditions we can deliver significant progress against these objectives in 2015.

2015 is the first year of our 2015 - 2017 medium term targets, which we announced in May 2014. We are well placed to make a strong start to 2015 and are confident that we will continue to demonstrate significant progress through the year.

* Operating profit is defined as profit on ordinary activities from continuing operations before net finance costs and exceptional items, after share of results of joint ventures.

-Ends-

Jan 12:
JP Morgan : Overweight - TP: 150p
Panmure Gordon: Hold - TP: 120p
Liberum Capital: Buy- TP: 130p Buy
Citigroup: Buy - TP: 144p
Deutsche Bank: Buy - TP N/A

Where next for the housebuilding sector?

StockMarketWire.com
Taylor Wimpey has hiked its FY pretax profit to £468.8m, from £306.2m. Revenue was £2.69bn, from £2.3bn. Its total maintenance dividend was 1.56p a share, from 0.69p, with the final dividend at 1.32p, from 0.47p.

CEO Pete Redfern said 2014 was an excellent year for Taylor Wimpey, delivering a 54% increase in operating profit whilst contributing £300m to communities via planning obligations, providing key infrastructure, education and affordable housing.

"The beginning of 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.

"The UK housing market remains healthy and we are very confident in our ability to maximise returns on our investments whilst continuing to invest in the underlying quality of the business.

"We believe that the current strong performance can be sustained and improved and therefore we have proposed a doubling of the 2014 maintenance dividend pay-out to the top end of our dividend policy range."

Looking ahead, Redfern said:
"We are currently operating in a housing market underpinned by a significant structural demand and supply imbalance. Housing remains high on the political agenda with recognition of the importance of housebuilding to the economy and the need for more quality homes in the UK by all of the main political parties.

"Whilst there remains uncertainty around the outcome of the General Election in May, consumer confidence remains solid and is supported by healthy underlying demand, low interest rates and high levels of employment. We therefore consider that the UK near term market risk is low.

"The beginning of the spring selling season has seen both demand and trading at the better end of our expectations. Net private sales rates for the year to date (w/e 1 March 2015) of 0.70 are at healthy levels (2014 equivalent period: 0.72) and within the range we see as sustainable.

"With slower market growth, we anticipate reducing build cost pressure in 2015.

"As at 1 March 2015, we are 51% forward sold for private completions for 2015 with a strong total order book of £1,657 million (2014 equivalent period: £1,529 million). This together with our strong landbank, with over 50% of plots sourced from the strategic pipeline, positions us well for 2015 and beyond.

"We remain confident that our long term strategy, enhanced by the stretching medium term targets we announced in May 2014, will enable us to maximise the best quality returns from our investments on a sustainable basis across the housing cycle."

Skinny,

Thanks for the direct to Where next for the housebuilding sector?

Interesting, I am heavy on builders and relieved not to be out on a limb.

Skinny,

Thanks for the direct to Where next for the housebuilding sector?

Interesting, I am heavy on builders and relieved not to be out on a limb.

Perhaps you may be interested in this then - UK construction growth unexpectedly surges in February - PMI

Mar 16:

Goldman Sachs: Conviction Buy: TP: 202

Deutsche; Buy - TP now 173p

They are so fickle! :-)

to my mind it's a toss up between TW and BDEV, both of which perform similarly
a good place to be both before the budget and the election

Plus div 9th april 1.32p and 21st May 7.68p

M.

Buy both.

I hold TW since 2009 and BDEV for a shorter period.

Also, hold SBs with wide stops for trading.

Liberum Capital Buy 150.35 150.50 152.00 165.00 Reiterates

i think house builders in general has to be the right sector even before the election

cynic, I agree - a Sector that's seeing Demand and NIMBY regulations appear to be restricting all but expensive developments.
What I don't understand is why on the one hand we need so many Houses, yet we ( Govs ) fail to build them. Never understood "Affordable", either - surely that means a modest multiple of Wages?, That varies across the Country...forget London/SE and elsewhere houses should be starting at £100k for a 2-bed with parking on the drive. That's hardly enough for a modern family with 2+ children and 2x cars . . . . meaning they need something like 4-bed with double garage.. ~£150k - but with land in such short supply, that price would be impossible...
Do we need to have a better/cheaper/faster method of building?

yes but people wouldn't like it

just as pre-fabs were put up just after the war, and lasted many many years longer than anticipated, so now we could use 20/40' shipping containers
these are already used as temporary accommodation and offices all over the world including uk, and nor need they be visually ugly

unfortunately, and it is a sad fact, the current wannabe house owner wants (tries to demand) accommodation that is far beyond realistic expectations, let alone income

we should also be doing far more to regenerate existing but empty but (relatively) derelict stock

"Do we need to have a better/cheaper/faster method of building?"........These guys are trying to do it, but are struggling to make money out of it at the moment:

http://www.marcityhomes.com/mar-city-homes/unique-modular-homes/

btw, straw is another method of cheap, highly energy efficient and surprisingly long-lasting construction
a major downside is that the walls are about a foot thick, so the footprint is much greater than for a traditional house