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Taylor Wimpey upbeat after cutting debt by half to £750m

18 Jan 10 Taylor Wimpey has issued an upbeat trading statement, following an “encouraging” end to last year which sees it enter 2010 with a “very strong” order book. More...

Peter Redfern, Taylor WimpeyTaylor Wimpey has issued an upbeat trading statement, following an “encouraging” end to last year which sees it enter 2010 with a “very strong” order book.

The house builder, headed by group chief executive Peter Redfern (pictured), has also managed to cut its gigantic debt from £1,529m at 31 December 2008 to around £750m, due to its focus on cash generation.

However, the statement, ahead of Taylor Wimpey’s annual results on 3 March, added that market conditions in both the UK and North America remain “challenging”. 

During 2009, the firm completed a total of 10,186 homes, of which 8,432 were private completions (2008: 10,585) and 1,709 were affordable homes (2008: 2,751), plus 45 joint venture completions (2008: 58).

The overall average selling price for completions in the full year increased to £160k from £153k in the first half of 2009 (FY 2008: £171k), with private average selling prices increasing to £171k (H1 2009: £163k, FY 2008: £187k) and affordable average selling prices broadly flat at £108k (H1 2009: £109k, FY 2008: £108k).

The house builder’s UK order book is up 28% by volume compared to the end of 2008. It has increased its private order book by 62% to 3,048 homes (31/12/2008: 1,887 homes). Including affordable housing reservations, the year end order book was 5,431 homes.

Taylor Wimpey had 310 active outlets at the end of 2009 (30/06/2009: 333, 31/12/2008: 386).

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The statement continued: “We enter 2010 with a very strong order book position. We are active in the land market and approved new land purchase commitments for 3,003 plots at 22 new sites during the second half of 2009. 

“Our strong, southerly-weighted landbank and ongoing opportunities to convert further plots from our strategic landbank enable us to continue to be highly selective regarding the opportunities that we pursue.

“Current market conditions are stable, with supply remaining restricted and demand solid. However, the risks of further weakness in the wider economy and reduced mortgage availability remain.  Our operational focus remains on build cost reduction and achieving sales price increases and we are well positioned to deliver an improved operating margin in 2010.”

In North America, where Taylor Wimpey completed 4,755 homes in 2009 (FY 2008: 5,421), the house builder said it was “encouraged by the prolonged period of stability”. In its smaller Spain & Gibraltar business, where it completed 225 homes in 2009 (FY 2008: 214) at an average, market conditions are likely to “remain challenging” in 2010. The firm plans to exit from its small business in Gibraltar.

The trading statement concluded: “Although the preparation of our year end financial accounts is still in progress, we do not anticipate making any further material adjustments to land values following the completion of our carrying value review.

“The Board expects to report full year results in line with its expectations.”

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