First-half results show sale completions down by nearly 60% after impact of covid crisis
Taylor Wimpey, the UK’s second-biggest housebuilder, has made a pre-tax loss of £39.8m in the wake of the covid crisis, according to half-year results published this morning.
The loss of revenue for the six months to June 28 compares to a profit of £300m for the same period in 2019, and comes on the back of a 58% slump in completions due to the coronavirus-related construction hiatus.
The £4bn-turnover firm said that it built just 2,771 homes in the first half of the year, compared to 6,541 last year, resulting in an equivalent drop in turnover of 57% to £754m. This caused the collapse to the £39.8m loss, as the firm absorbed £39m of additional costs directly related to the covid crisis in addition to the drop in revenue.
Taylor Wimpey said it now expected completions for the full year to be down around 40%, which will have “significant impact on revenues and margins in 2020 and will have some knock-on impact on 2021 delivery”.
The firm said that there remained “a high degree of uncertainty in the short term from both the impact of covid-19, particularly on employment, as well as the UK’s exit from the European Union”, but that demand had nevertheless remained robust.
Sales per site per week, which had been running at 0.97 prior to the imposition of lockdown, then fell to around 0.30. They have recovered to 0.70 since the market re-opened.
However, it was clear from the firm’s statement that delivery remains more of an impediment to its performance than sales, with the business now 97% sold against the homes it hopes to build this year, compared to 87% last year. It said that starts that it had expected to make in the last quarter of this year had been pushed into the first quarter of next year, with sites still only running at 80% of usual productivity levels given social distancing requirements.
The statement said Taylor Wimpey had “very limited availability of homes for customers to move into in 2020”.
It added: “This gives us significant confidence for this year’s completions, although reduced availability is likely to mean that sales rates remain below normal until construction catches up.”
In June, Taylor Wimpey raised £510m to invest in land, and today said it had already secured 26 sites at a cost of £346m, representing 6,145 plots.
The firm said that all employees have now returned to the business from furlough and that all sites have been re-opened. Around half of sales in the period were reliant on the government’s Help to Buy subsidy, which is due to end in its current form at the end of the year.
Taylor Wimpey chief executive Pete Redfern (pictured, left) said he was pleased with the firm’s “resilient” performance during the period. He added: “Our performance for the first half of 2020 has been impacted by the closing of our sites and sales centres but we have now reopened all sites successfully and safely and have returned to a sustainable level of sales and build.”
He said the firm’s balance sheet strength, long order book and high quality and growing landbank meant the business was confident it would emerge stronger from the pandemic. “While uncertainties remain, we are confident in the underlying fundamentals of the housing market,” he added.