UK’s Taylor Wimpey upbeat on profits as house completions on track

By Aby Jose Koilparambil

(Reuters) -Taylor Wimpey expects annual operating profit around the top end of analysts’ expectations and to meet its house completions target despite supply challenges, Britain’s third-biggest homebuilder said on Wednesday, boosting its shares.

Britain’s housing sector is struggling with a surge in build costs, labour shortages and supply chain snags. Last month, Taylor Wimpey’s bigger rivals Barratt and Persimmon flagged pressure on completions.

“We continue to expect low single digit year-on-year growth in UK completions for 2022 and our margin guidance remains unchanged,” Taylor Wimpey said in a statement.

The company built 14,087 homes in its last financial year.

The FTSE 100 firm, which also has a small presence in Spain, said the sector had seen build cost inflation of around 9-10%, but this had been fully offset by house price growth.

However, British house prices rose at a slower pace in monthly terms in July than in June, figures from mortgage lender Nationwide showed on Tuesday, in fresh signs of a potential cooling in the market.

Matt Britzman, equity analyst at Hargreaves Lansdown said in a note it remained to be seen how long strong house prices could continue to offset cost pressures, but shareholders could expect solid returns while that trend lasts.

Taylor Wimpey CEO Jennie Daly said customers were asking for more information about energy efficiency in its homes amid soaring energy costs.

“The customer research which we did indicates that it (energy efficiency) really has gone up the customer’s list of priorities,” she said on an earnings call.

Taylor Wimpey said pretax profit for the six months ended July 3 rose more than 16% to 334.5 million pounds ($406.9 million). It expects annual operating profit at the top of end of analysts’ forecast range of 873-924 million pounds.

Shares in Taylor Wimpey, which have declined more than 30% so far in 2022 in line with housing sector index, gained as much as about 4% to 124.60 pence in morning trade.

($1 = 0.8221 pounds)

(Reporting by Aby Jose Koilparambil in BengaluruEditing by Shailesh Kuber and Mark Potter)