Taylor Wimpey looks to stronger 2021 after profit dip

The housebuilder posted a 68% annual drop in pre-tax profit for the full year 2020, attributed to fewer project completions due to Covid-19, but reported a solid start to 2021.

“The 2021 selling season has started well, following on from the stronger than expected recovery of the housing market in the second half of 2020 and reflecting the underlying strength of demand,” the company said in a stock exchange filing.

The total number of UK home completions (including projects led by Taylor Wimpey joint ventures) last year decreased by 38.9% to 9,609, mainly due to the impact on production capacity of the construction shutdown in the second quarter, according to the filing.

This squeezed Taylor Wimpey’s revenue for the year, by 36% to £2.7bn, with pre-tax profits significantly down year-on-year to £264m. However, the results were in line with the company’s estimates for what it saw as an “unusual and volatile” year, it said.

Taylor Wimpey’s group chief executive Pete Redfern added: “2020 was a very challenging year, during which our priority has continued to be the health and safety of our colleagues, customers, suppliers and subcontractors. Operating performance bounced back strongly in the second half of 2020, with build capacity returning to near normal levels and strong sales.

“We are confident in the medium-term performance of the housing market and therefore accelerated our land purchases from May 2020 as high-quality land became available at attractive rates.

“We are now focusing on driving efficiencies across the business, the roll-out of our new house type range and implementing our ambitious new environmental strategy.”

Taylor Wimpey will reinstate its dividend after pausing it last year. It proposes to pay out around 7.5% of net assets, starting with a proposed 2020 final dividend of £151m (4.14 pence per share), subject to shareholder approval.

“The UK housing market has been resilient and continues to reinforce our confidence in our outlook. We are a cash generative business with a strong balance sheet,” Redfern said.

Taylor Wimpey announced £125m in funding to support fire safety improvement work, such as cladding, to bring apartment buildings constructed by the company over the past two decades in compliance with recently updated national safety standards. It has identified 232 apartment buildings that may require such works, according to the filing.

“We have taken this decision to provide certainty for customers and leaseholders and to avoid them bearing the cost of investment to ensure their buildings are safe,” said Redfern.

“If Taylor Wimpey no longer owns the building and it is not eligible for the Building Safety Fund, or similar support that may be announced in the future, where a freeholder produces a fair and proportionate plan for fire safety improvement works following EWS1 assessment, we will contribute funding to bring those buildings up to the standards.

“This is a complex and exceptional situation, but Taylor Wimpey is focused on doing the right thing for its customers.”

The latest funding is on top of the £40m provided by the Government to fund cladding removal on non-compliant properties following the 2017 Grenfell fire.

Taylor Wimpey is delivering several large-scale housing schemes across the North West, including the 258-unit first phase of Harworth Group’s Moss Nook in St Helens, and 450 homes in Middlewich, among others.