Profit and revenue down at Taylor Wimpey as inflation bites

Revenue and profit dropped dramatically at Taylor Wimpey last year.  

The housebuilder’s results for the year to 31 December showed revenue was down 20.5% from £4.42bn in 2022 to £3.51bn.

Pre-tax profit also dropped, 42.8% from £828m to £474m, confirming the housebuilder’s prediction last month that profit would be at the higher end of the forecast range.

Taylor Wimpey said that while trading was “encouraging” in the first quarter of the year, higher than expected inflation in the second quarter had impacted the base rate, with an impact on mortgage rates.

It blamed the lower profit on high-build cost inflation and fixed build and selling costs being absorbed over fewer completions.

Private completions were down to 10,848 from 14,154 but were still higher than the company had predicted last year. 

It predicted output would fall further in 2024, with completions expected to be in the range of 9,500 to 10,000 homes and slightly weighted towards the second half of the year. 

Jennie Daly, chief executive, said it was “still early in the year” and that the macroeconomic backdrop remained “uncertain” but that it was “encouraging to see some signs of imporvement” on the back of reduced mortgage rates. 

“While the planning environment remains challenging, we have a high-quality, well-invested landbank and a strong financial position which underpins our ability to provide investors with a reliable income stream via our differentiated Ordinary Dividend Policy,” she said. 

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“Looking ahead we are well-positioned in an attractive market, with significant underlying demand for our quality homes and are poised for growth from 2025, assuming supportive market conditions.” 

The firm’s results statement said first half operating profit margin would reflect lower pricing and build cost inflation of around 4%, as well as investments in IT and a timber frame facility. 

UK net private sales rate for the year stood at 0.62 homes per outlet per week, compared with 0.68 in 2022, while average selling prices on private completions were up 5.1% to £370,000, from £325,000. 

Taylor Wimpey has made provisions amounting to £245m for building safety and has identified 214 within the scope of those provisions, half of which it has either remediated, started work on, or expect to commence work on this year. 

Taylor Wimpey is one of eight housebuilders being investigated by watchdog the Competition and Markets Authority (CMA) over alleged anti-competitive behaviour. If found guilty of wrongdoing it could face a fine of up to £420m.

The business welcomed the CMA’s report on the housebuilding market, published earlier this week, and said it would “cooperate fully” with the newly-opened investigation.