LONDON (Alliance News) - UK housebuilder Taylor Wimpey PLC Wednesday said pretax profit before exceptional items rose by almost 50% as its full-year results beat analyst expectations.
The FTSE 250 company posted profit before tax and exceptional items of GBP368.4 million for the period ended December 31, 2013, versus GBP181.8 million a year earlier, while pretax profit rose to GBP306.2 million from GBP204.2 million in 2012. Revenue increased to GBP2.30 billion from GBP2.02 billion in the corresponding period.
Analysts had expected adjusted pretax profit of GBP281.1 million and revenue of GBP2.28 billion.
Taylor Wimpey said its strong performance was down to a number of factors including group completions rising to 11,814 from 11,042 against a backdrop of an improving UK housing market.
All the UK's major housebuilders have reported an accelerating recovery in the UK housing market through 2013 and into this year, particularly in the southeast of England where Taylor Wimpey has high exposure. The builders virtually halted new construction in the wake of the financial crisis as banks pulled mortgage financing and the ensuing economic crisis put off house buyers. The companies instead focused on paying down debt.
The firm said that following the introduction of the UK government's Help-to-Buy scheme it saw interest levels and sales rates increase.
The first phase of the Help to Buy scheme in England started in April 2013, making buyers of newly built homes eligible for a 20% equity loan from the government on top of their 5% deposit. The second phase, which started in the Autumn, guarantees a portion of a buyer's mortgage.
Overall, Taylor Wimpey's average selling price on completions increased to GBP191,000 from GBP181,000 a year earlier. The average selling price of affordable completions was slightly lower than last year at GBP110,000 from GBP112,000 in 2012, but the average selling price on private completions rose 6.6% to GBP210,000 from GBP197,000 a year earlier, which the firm attributed to a shift to better quality locations.
The firm said the land market remained relatively "benign" in 2013, with total land spend, including land creditors, totalling GBP566 million, up from GBP427 million. In addition, a total of 18,770 plots were added to the firm's short-term landbank, of which 49% were converted from the strategic pipeline.
Taylor Wimpey warned that against the backdrop of a constrained planning environment, opportunities to buy are "not limitless", and it has seen "tightening" in some local markets, particularly during the last quarter of the year.
"Whilst this is not currently impacting the margins at which we are able to secure land, we anticipate that during 2014 and 2015 the number of value-creating opportunities will naturally reduce," the firm added.
Taylor Wimpey said its strategy will now consist of adding to its landbank through the promotion and conversion of its strategic pipeline.
In Spain, the firm said it completed 118 homes, down from 156 homes, at an average selling price of GBP194,00, down slightly from GBP197,000 in 2012.
The reduction in homes completed was primarily the result of a lower order book at the start of the year and resulted in lower revenues for the period of GBP24.1 million from GBP32.0 million, a year earlier.
Commenting on the Spanish market, Taylor Wimpey said: "Whilst the wider macro-economic uncertainty has considerably improved, customer confidence still remains subdued on the whole and in certain locations continues to be extremely challenging with mortgage availability remaining restricted."
Overall, the firm said its group order book rose 31% to GBP1.24 million at the end of December, compared with GBP948 million in the corresponding period, while its tangible net asset value per share increased 13% to 69.6 pence from 61.5 pence.
Tangible net assets per share is defined as net assets excluding goodwill and intangible assets divided by the number of shares in issue at the period end.
Taylor Wimpey declared a final dividend of 0.47 pence, up from 0.43p a year before. That raised its total dividend for 2013 to 0.69p from 0.62p in 2012.
The stock was trading at 122.18 pence Wednesday morning, down 5.60 pence or 4.4%.
By Anthony Tshibangu; anthonytshibangu@alliancenews.com; @AnthonyAllNews
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