Taylor Wimpey share price: Group updates on recent performance

on Nov 14, 2016
Updated: Oct 21, 2019
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Taylor Wimpey (LON:TW) has updated investors on its recent performance this morning.

**Highlights from the company statement:**
Pete Redfern, Chief Executive, commented:

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“Trading during the second half of 2016 and into the autumn selling season has been strong, with good levels of customer confidence and demand underpinned by a wide range of mortgage products. While there remains some uncertainty following the UK’s vote to leave the European Union, we are encouraged to see that the housing market has remained robust and trading has remained resilient. We have a strong order book position for 2016 and going into 2017, and we will maintain our focus on delivering our medium term targets. Looking ahead, we continue to implement our disciplined strategy which ensures that we are well placed to perform well through all market conditions and deliver enhanced value through the cycle.”

UK current trading
The UK housing market has remained positive in the second half of 2016, with a high level of customer confidence. Customers benefit from a competitive mortgage environment, with a wide choice of mortgage products available across a range of loan to value ratios.

Underlying trading is stable across our core geographies. Whilst the wider London market remains positive and in line with the rest of the UK, as previously guided the central London market has slowed during 2016. In Zones 1 and 2, prices have softened slightly at the upper end during the second half of the year, however there remain high levels of demand in this market.

Sales rates for the year to date have remained strong at 0.75 sales per outlet per week (2015 equivalent period: 0.76). For the second half of the year to date, sales rates are 0.70 (2015 equivalent period: 0.74).

Cancellation rates for the year to date remain low at 13% (2015 equivalent period: 11%). During the period we operated on an average of 291 outlets (2015 equivalent period: 301).

We are fully sold for our targeted 2016 completions and are building our order book for 2017 and beyond. As at 6 November 2016, we are c.23% forward sold for our expected 2017 private completions. The current total order book, excluding joint ventures, is ahead of last year and in total represents 8,981 homes (week ended 1 November 2015: 8,529), standing at £2.3 billion (week ended 1 November 2015: £2.1 billion).
Group financial position
We expect net cash at the end of 2016 to be around £360 million (31 December 2015: £223.3 million), subject to the timing of conditional land purchases, and after the payment of £356 million of dividends to shareholders in 2016.

Following the recent issue of the €100 million private placement, which together with our £550 million revolving credit facility provides us with adequate committed funding for our liquidity needs, we have prepaid our £100 million term loan that was originally due to be repaid in installments by 2020. As a result, we expect to reduce our financing interest costs next year by at least £4 million.

Outlook
Whilst the implications following the EU Referendum are still unclear, the UK housing market has remained resilient, with long term fundamentals underpinned by strong demand. Looking ahead, we remain confident that our business model and strategy focused on managing the business through the cycle positions us to perform well through all market conditions. We continue to focus on delivering our enhanced medium term financial and quality objectives, embedding our customer service processes and driving improvement in operational discipline. We expect to deliver an improvement in operating profit* margin in 2016 (FY 2015: 20.3%), as previously guided, and a return on net operating assets** of around 30%. We remain committed to the announced £450 million total dividend payment to shareholders in 2017.
As of 07:10 GMT, Monday, 14 November, Taylor Wimpey plc share price is 146.30p.

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