Taylor Wimpey reports completions fell 39% in 2020

Taylor Wimpey outlined that its total number of house completions fell by 39% to 9,799, between 2019 and 2020.

Taylor Wimpey reports completions fell 39% in 2020

Taylor Wimpey outlined that its total number of house completions fell by 39% to 9,799, between 2019 and 2020.

It attributed this to the site shutdowns in the second quarter of the year due to the pandemic.

As a result, the housebuilder reported 2020 revenue of £2.79bn, down from £4.31bn in 2019.

In addition, the company’s voluntary ground rent review assistance scheme is nearing its conclusion, having reached agreements with 99% of freeholders, with the remaining 1% in negotiations.

It has also revealed an additional £125m fund for fire safety work on properties, which have issues relating to cladding.

Pete Redfern, chief executive of Taylor Wimpey, said: “2020 was a very challenging year, during which our priority has continued to be the health and safety of our colleagues, customers, suppliers and subcontractors.

“Operating performance has bounced back strongly in the second half of 2020, with build capacity returning to near normal levels and strong sales.

“We are confident in the medium term performance of the housing market and therefore accelerated our land purchases from May 2020 as high-quality land became available at attractive rates.

“We are now focusing on driving efficiencies across the business, the roll out of our new house type range and implementing our ambitious new environmental strategy.

“The UK housing market has been resilient and continues to reinforce our confidence in our outlook.

“We are a cash generative business with a strong balance sheet, and we are pleased to announce today that we will reinstate our ordinary dividend in line with our aim of providing a reliable income stream to our shareholders.

“As part of today’s results, we are also announcing help for building owners, with £125m in funding to support fire safety improvement works to bring Taylor Wimpey apartment buildings constructed in the last 20 years up to the recently updated current RICS EWS1 guidance.

“We have taken this decision in order to provide certainty for customers and leaseholders and to avoid them bearing the cost of investment to ensure their buildings are safe.”

Oliver Creasey, head of property fund research at Quilter Cheviot, added: “Taylor Wimpey’s full year results, released this morning, contained limited surprises given the company had already provided a trading statement covering the same period.

"The key new information is around the business’s operating margin.

"The figure for 2020 (10.8%) was understandably low compared to prior years with COVID-19 causing a 36% fall in revenues.

“However, the sales volumes and average prices rebounded strongly in the latter half of the year, which gives us confidence that both revenues and profit will improve in 2021.

"Management feel similarly, providing guidance that the 2021 operating margin should bounce back to 18.5-19%, close to the pre-pandemic figure, and the company’s long-term target of 21-22%.

"This projected recovery is ahead of many sell-side analyst expectations.

“The housebuilder is proactively trying to manage its exposure to negative headlines affecting the industry.

"Following the Grenfell tragedy, the business announced a £40m provision to fix cladding issues on legacy apartment buildings, and has today announced an additional £125m fund for fire safety work on these properties.

"We are encouraged to see the firm taking its responsibility seriously, while still being able to make dividend payments to shareholders and maintain a cash balance in line with prior years.

“The company has an order book of over 11,000 homes (compared to total sales of 9,600 in 2020).

"A significant number of these orders are likely to benefit from the government’s expected extension to the stamp duty land tax holiday to the end of June 2021.

"Unsurprisingly, the company has not commented on speculation regarding a new mortgage guarantee scheme being announced in tomorrow’s Budget, but they do note that two of their most significant business risks are a lack of mortgage availability for customers, and unfavourable government policy, so any such scheme, if announced, is likely to have a considerable benefit to the business.”