Taylor Wimpey upbeat on "stable" housing market
The group expects to continue posting a better performance period-on-period
By CFOWorld staff | CFO UK | Published 13:34, 04 July 12
Taylor Wimpey said a “stable” housing market is expected to boost its financial results for the first six months, the housebuilder said on Wednesday.
With demand continuing to outweigh supply across the country Taylor Wimpey and its rivals haven’t suffered significantly despite the worsening economic outlook and the economy in its second recession in four years.
If these stable market conditions continue, the group expects to continue posting a better performance period-on-period, with full-year returns in 2012 that are ahead of cost of capital and in line with expectations, Taylor Wimpey said on Wednesday.
"We think it is most likely that the current conditions will continue, but that doesn't mean it's certain," chief executive Pete Redfern told reporters.
The major risks were from outside the UK housing market, and mainly to do with the banking system, he said, adding that those risks had existed for some years without having a significant impact on the market.
"We like everybody else will watch what's happening in southern Europe, with the impact on the banking system, closely," he said.
Redfern added that if conditions remained broadly stable, he was "happy" with a consensus of analyst forecasts that put full-year operating profit at around £207 million, about 30 percent higher year-on-year.
The UK’s second biggest housebuilder by volume completed 5,083 homes in the first half, up from 4,707 in the first half of 2011, with the overall average selling price of the completions increasing to £175,000 from £168,000 pounds.
Tightness in supply offsets the difficulty buyers face in securing mortgages, Redfern said. "The tightness of supply is reassuring."
The company was continuing to buy land when it could do so at attractive return levels.
Taylor Wimpey's order book grew to £960 million as of 1 July, up from £932 million a year earlier.
The company's shares were down 2.13 percent at 48.21 by 0822 GMT.
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