Taylor Wimpey's weekly net private sales rate since the half year was 0.51 per outlet, in line with the same period last year, despite high mortgage rates continuing to negatively impact consumer affordability.
On 5 November, the total order book excluding joint ventures stood at £1.9bn, down from £2.6bn last year.
Build cost inflation has continued to moderate over the financial year, in line with group expectations.
Total completions guidance has been maintained, with the group expecting to deliver between 10,000-10,500 homes this year. But full-year operating profit is expected to be at the top of the group's £440-470m guidance.
After dividend payments of around £338m in 2023, the year-end net cash position is expected to be in the £500-650m range.
The shares rose 1.7% following the announcement.
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Our view
Taylor Wimpey's sales rates in the second half have held up relatively well so far, and are in line with last year. But keep in mind, that this was a relatively easy comparative period given the fallout from September 2022's mini-budget fiasco, which caused a significant drop in demand over the following months.
Zooming out, the high-interest rate environment remains a headwind for buyers, making mortgage affordability tough and ultimately denting demand. As a result, we're seeing year-to-date sales rates move lower and cancellation rates edge higher. These were the factors underpinning a double-digit decline in revenues over the first half.
The sector's also facing ongoing labour and supply chain challenges, and planning permission disruptions are continuing to be a thorn in the group's side. Build cost inflation remains uncomfortably high too, but has eased from the 9-10% levels seen at the start of the year.
Housebuilders are, by definition, cyclical businesses. Performance has often risen and fallen along with broader economic conditions so it's important to look at the big picture when the downturns come round. Although of course past performance is not a guide to the future.
With that in mind, there are some positives. The landbank is a particular strength for the group, who've built a robust bank of potential projects. The focus now is bringing plots online, with new land spend slowing as sales rates decline. That's wise, given the cost of land is yet to reflect the less favourable outlook.
There are also some underlying tailwinds supporting the longer-term market too. Brits are ideologically committed to home ownership and the country has been in a prolonged period of housing undersupply, a trend that's unlikely to change anytime soon.
The balance sheet's in good shape too. The group expects to have a net cash position of around £500-650m by year-end, which should help provide a cushion for the bumpy road ahead.
The current dividend policy is linked to asset value, rather than earnings. That means investors are more likely to receive a base level of dividend even in a downturn. But remember, dividend policies can change on a dime. No dividends are guaranteed.
Taylor Wimpey doesn't boast the margins of some of its more specialist peers and a good deal of pain remains built into the valuation, which is well below its longer-term average. As far as broad-based exposure to the UK housing market goes, Taylor Wimpey looks to be in as robust a position as it could be for now.
Taylor Wimpey key facts
All ratios are sourced from Refinitiv. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn't be looked at on their own - it's important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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