Shares in housebuilder Taylor Wimpey fell 8% in trading yesterday when it announced a massive drop in profits due to fallout from the Covid-19 lockdown.
The company’s half-yearly results for the period ending 28 June make grim reading – and not just for investors.
Gross profit for the half was £91m, compared with £409.6m in H1 2019, with a gross profit margin of 12.1% (H1 2019: 23.6%). Group operating profit fell to a loss of £16.1m compared with £311.9m profit in the same period last year.
And in bad news for the property pipeline, total home completions (excluding joint ventures) dropped by 58% to 2,713 from 6,432 in H1 2019. This included 637 affordable homes (down on 1,594 in H1 2019), equating to 23.5% of total completions
However there was some positive news in the company report.
In the nine weeks since Taylor Wimpey’s sales centres reopened in England, the sales rate increased from 0.3 (during shutdown) to 0.7 and there has been a 206% increase in appointments booked and a 50% increase in website visits, year on year.
As at 26 July the company was roughly 97% forward sold for private completions for 2020 compared with 87% in the same period last year but with very limited availability of homes for customers to move into in 2020.
Reduced availability is likely to mean that sales rates remain below normal until construction catches up.
Strong order book
Forward indicators remain strong and the order book has increased in both value and number of homes. The total order book, representing represents 12,014 homes, stands at £3.0bn, compared with £2.5bn the same period last year, when 10,558 homes were on the order book.
Chief executive Pete Redfern said: “I am pleased with Taylor Wimpey’s performance during a very challenging time and am proud of the resilience, principled approach and agility that our teams have shown.
“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. We are delighted that our NHS and care workers discount scheme has been taken up by over 1,200 households to date.
“Looking ahead, balance sheet strength, a long order book and our high quality and growing landbank gives us confidence in our ability to navigate the challenges and emerge stronger from the pandemic. While uncertainties remain, we are confident in the underlying fundamentals of the housing market.”