Firm closes Oxfordshire business and says completions could drop by more than a third
Housebuilder Taylor Wimpey is set to reduce the number of homes it builds this year by a third as the “weaker economic backdrop” hits sales of its houses.
Announcing full year results for 2022, the firm said it currently expected its housing output to fall to between 9,000-10,500 homes in 2023, down from the 14,154 produced last year.
If this was realised, the drop would represent a drop as much as 36% in its housebuilding volume, with the statement making Taylor Wimpey the second housebuilder in as many days to predict a sharp drop in build output for the year, following on from Persimmon yesterday.
The firm also revealed it had closed its Oxfordshire business as part of a restructuring and redundancy process announced at the start of the year in response to the downturn, which is designed to save the business £20m per annum.
Taylor Wimpey, the UK’s second largest housebuilder by revenue, made the comments as it announced pre-tax profit of £828m for the 2022, up 22% on 2021, on turnover of £4.42bn, up 3%.
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Like Persimmon, Taylor Wimpey said it had seen an uptick in reservation rates since the New Year as mortgage rates had reduced from post “mini-Budget” highs. But it said the reservation rate since January of 0.62 sales per site per week was still well below the 1.02 seen in the same period last year.
The firm added: “While it is encouraging to see an uptick in sales […] our reservation rate is significantly lower than in recent years as affordability concerns weigh, particularly for first time buyers, and we have reflected this in our build programmes for the year.”
The firm said its total forward order book was currently 26% down from the same point last year, at 8,078 homes. It said: “Accordingly, assuming prevailing market conditions continue and given a challenging planning backdrop, we currently expect 2023 completions to be in the range of 9,000 to 10,500”.
Taylor Wimpey said this range assumed the weekly sales rate remaining at between 0.5-0.7 sales per site throughout the year, and added that sales would likely be more weighted to the second half of the year.
Jennie Daly, Taylor Wimpey chief executive, said the firm had delivered a “strong” performance in 2022 and that the business had “acted quickly and decisively to address rapidly changing market conditions in the second half of the year”.
She added: “While the weaker economic backdrop continues to impact the near-term outlook, customer interest in our homes remains good and, whilst it is still early in the year, trading has shown some signs of improvement compared to Q4 2022.”
Taylor Wimpey said the restructuring and cost-cutting measures announced in January had now been largely carried out, at a one-off cost of £8m, to produce an annual saving of £20m. The firm said the consultation on “business changes to optimise our performance and in response to market conditions” had resulted in redundancies but did not say how many jobs had been cut.
However it did say the group had closed its Oxfordshire business, transferring land and outlets to neighbouring regions. Taylor Wimpey said: “The proposed changes will not affect our existing market coverage or ability to deliver volumes from our landbank.”
Taylor Wimpey added that it intended to sign the legal contract underpinning the government’s cladding pledge but said that it was concerned that proposed changes to the National Planning Policy Framework, announced by the government before Christmas, “are likely to lead to a reduced land supply and less homebuilding in future years”.
The firm added that it is investing in a new 240,000 sq ft timber frame housebuilding facility in Kingston Park, Peterborough, as part of its drive to deliver low carbon homes. Nick Wright, manufacturing and supply chain director of Taylor Wimpey, said: “Timber frame is a key part of Taylor Wimpey’s long-terms strategy to deliver low carbon, energy efficient homes and communities, whilst also providing operational efficiencies and security of supply.”
The firm said the facility will be up and running by the spring, with the initial focus of the factory on external panel, internal partitions and floors.
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