Taylor Wimpey bemoans rising interest rates as revenues and profit drop
Taylor Wimpey has reported a 21% fall in revenue and a 29% drop in pre-tax profit as rising interest rates knocked the housing market.
In a trading update issued today, the housebuilder revealed revenue in the six months to 2 July 2023 fell to £1.64 billion from £2.08bn the year before, while pre-tax profit slumped to £237.7 million from £334.5m before.
While housing completions fell to 5,120 homes from 6,922 last year, this was slightly ahead of expectations.
The company highlighted a weakening of market conditions in the second quarter as the Bank of England responded to higher than expected inflation by increasing the base rate from 4.5% to 5% in June, driving an increase in the cost of mortgages towards the end of the half.
Full year UK completions excluding JVs are now expected to be in the range of 10,000 to 10,500, at the upper end of previous guidance with full year group operating profit including JVs expected to be between £440m and £470m.
Jennie Daly, chief executive, said: “The first half of the year has been characterised by variable market conditions including substantially higher mortgage rates. While this has inevitably impacted our results, I am pleased that we have delivered a resilient performance with first half completions slightly ahead of our expectations. This performance is testament to the hard work of our teams on the ground and our strong focus on operational excellence and tight cost management.
“As we move into the second half of the year, our focus remains on optimising all areas of our operations as we continue to support our customers during this uncertain period. With a healthy orderbook and strong underlying interest for our well-located, high-quality homes, we expect full year UK completions excluding joint ventures to be in the range of 10,000 to 10,500, the upper end of our previous guidance.
“Taylor Wimpey is a strong, sustainable and agile business underpinned by a robust balance sheet and an excellent landbank. We remain well positioned to manage the business through near term challenges while maximising value in the medium to long term.”