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Wed July 24 2024

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Taylor Wimpey says productivity nearly back to normal

9 Nov 20 A trading update from Taylor Wimpey today confirms that most of its housing sites are now ‘operating at or near normal construction pace’.

After the first national lockdown, which saw sites close, activity and demand have rebounded strongly and are expected to remain undiminished by November’s second lockdown, the company said.

The focused in recent months has been on removing bottlenecks to increase construction pace.

A reviewed of structure and operations has led to £15m of costs being stripped out. These changes include the removal of one tier of operational management and a rationalisation of the London operating structure to focus on affordable housing.

"We are now safely operating at close to normal capacity with a product profile well positioned to meet customer demand,” chief executive Pete Redfern said. “The trading backdrop remains resilient and the quick recovery of the housing market is testament to the underlying strength of demand and supportive lending backdrop.”

He added: “We have made good progress in the second half of the year to date, maintaining a robust sales rate and building a strong forward order book.  Looking ahead, we are on track to deliver full year 2020 results towards the upper end of market expectations and with strong operational momentum and positive forward indicators, our confidence in 2021 has increased. As a result, assuming the market remains broadly stable, we expect to deliver 2021 operating profit materially above the top end of the current consensus range."

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This implies an operating profit towards £290m in 2020 and above £626m in 2021.

Customer forward indicators and sales have remained strong, he said, with the total order book, excluding joint ventures, representing 11,530 homes (2019: 10,486) as at 1st November 2020. The order book stands at around £3.0bn (2019: £2.7bn).

An equity raise in June armed Taylor Wimpey with a war chest for land acquisitions.

Since the end of the second quarter it has agreed terms on and authorised £826 million of gross land purchases, comprising 70 sites and around 4,500 plots – significantly ahead of its normal rate of acquisition.

“Combined with the strength of our underlying landbank, these sites give us increased confidence of delivering our medium term operating margin target and will enable us to accelerate our volume growth from 2023 onwards,” the company said.

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