A survey by Royal Institution of Chartered Surveyors last month indicated that skilled labour shortages were threatening further industry growth. Bricklayers are particularly in demand and bricks and blocks are in short supply. The latest Construction Trade Survey indicated that 41% of building firms struggled to recruit bricklayers during the fourth quarter of 2013, compared with just 3% one year earlier.
There are no such problems at Taylor Wimpey, however. It admits that it did see some cost increases and shortages last year, but these have now eased.
“Against a backdrop of the improving market conditions in 2013, we started to see some increases in costs in certain key trades and materials, and a shortage of supply in some areas, particularly in the first half of the year. As the market has adjusted, these short term pressures have eased, and we do not see material and labour supply as a major constraint,” the company said.
It added: “With improving industry volumes and pricing, we do expect some underlying cost increases in some areas following a number of years of falling or static costs. However, our scale affords us the benefit of strong purchasing power and we achieve significant cost savings across our regional businesses through national agreements with a number of suppliers.”
The company said that more than 90% of its material spend in 2013 was sourced by central procurement, with prices on national deals staying broadly flat. “This not only results in lower costs per item but, increasingly as we look forward, security of supply. Therefore, with our scale and processes, we do not believe that these changes will materially impact performance,” it said.
For the year ended 31 December 2013. Taylor Wimpey reported a 39% increase in operating profit to £312.8m (2012: £224.8m).
Revenue was up 14% to £2,295.5m (2012: £2,019.0m).
Profit before tax and exceptional items was up 48% to £268.4m (2012: £181.8m).
Chief executive Pete Redfern said: "In a housing market showing significant recovery for the first time in five years, we have strongly improved our operating performance, increasing operating profits by 39%. Most importantly, we have continued to make significant investment for the future, adding to our short term landbank and strategic land pipeline and increasing the level of training and development of staff, at all levels, from site trades to office technical roles. This strong platform and our clear operating and financial strategy leave the group well positioned to continue to make further progress in the years ahead."
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