One of Britain’s biggest housebuilders, Taylor Wimpey, has released it’s 2020 full-year results and as expected, there was a big hit to revenues and profits in 2020. But, there was also good news from the company as they reported that 2021 was off to a strong start on the sales front.
These are the key points from the statement.
Financial summary
Here’s the published financial summary from Taylor Wimpey for 2020 compared to the year before:
Credit: Taylor Wimpey
Some of the headline numbers are severe. Revenues for the year are down more than 35%. Profit for 2020 is down just over two thirds and earnings per share have been battered too.
This is no surprise as much of the UK economy closed under the first lockdown in 2020 and the economy continued to be hit by the pandemic and the measures put in place to control the spread of the virus.
These numbers follow a similar pattern to some of our major fenestration companies that have already reported their own 2020 results. And, just like our own companies, Taylor Wimpey is also reporting a strong comeback.
Speaking about the report, Chief Executive Pete Redfern commented:
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.
However, the outlook for this year looks far more positive:
The 2021 selling season has started well, following on from the stronger than expected recovery of the housing market in the second half of 2020 and reflecting the underlying strength of demand, underpinned by low interest rates and stable mortgage lending. The net private sales rate for the year to date (w/e 21 February 2021) was 0.89 (2020: 0.94).
We started the year over 50% sold for 2021 private completions and have continued to grow our order book. As at 21 February 2021, our total order book excluding joint ventures was £2,793 million (2020 equivalent period: £2,584 million), comprising 11,013 homes (2020 equivalent period: 10,880). Our order book includes a healthy profile of sales extending into the second quarter and beyond when the Stamp Duty Land Tax holiday is due to end and into the next phase of Help to Buy. With the benefit of a strong order book, we have tested sales pricing across our developments, and have achieved selling price growth in the first two months of the year.
You can read the full 52 page report here.
As I mentioned in similar posts of this nature, there is a running theme to these 2020 full-year reports. Companies take an absolute hammering in the first part of the year which does much of the damage for 2020. Then the recovery starts in H2 and 2021 outlooks are more positive. For companies like Taylor Wimpey, the Budget tomorrow, where we’re likely to hear news about Stamp Duty and other schemes will make a difference to the performance of their business.
Money for fire safety
The company did also state in their report that they were setting aside a significant amount of money to help towards the upgrading of their buildings to improve fire safety:
Doing the right thing for our customers is a key priority for the Group. Today we are announcing our intention to support building owners and leaseholders with fire safety investment to ensure their apartment buildings are safe and meet current EWS1 (External Wall Fire Review) requirements. This applies to Taylor Wimpey apartment buildings constructed over the last 20 years, including apartment buildings below 18 metres. We are making an additional £125 million provision, to be booked in 2021, to cover this cost.
I suspect other major housebuilders will also be taking similar measures to fund the replacement works required to make many of their older buildings safer.
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