Housebuilder Taylor Wimpey has cut its dividend as a rise in revenue masked a sharp fall in first half profits.
The company said annual shareholder returns would now be set at 4% of net assets, blaming the “prolonged market downturn”, which has reduced expected profitability and cash generation. It means the interim dividend is reduced to 1.20p from 4.67p.
It posted revenue of £1.68 billion, a 1.7% increase from the prior year, though adjusted operating profit fell 19.4% to £129.7 million, resulting in a 7.7% adjusted operating profit margin from 9.7%. The net cash position fell by 48.4% to £168.6m.
Profit before tax was £116.8m, compared with a £92.1m loss a year earlier, when the company booked substantial exceptional charges related to building safety provisions.
UK completions excluding joint ventures fell to 4,723 homes from 4,894. The average selling price rose 6.7% to £334,000, mainly because of changes in the regional and product mix rather than underlying house-price growth.
Taylor Wimpey expects to complete between 10,600 and 10,800 UK homes this year – the lower half of the range given in March. It warned that market conditions would remain challenging, with prices below last year’s levels and build-cost inflation of around 3-4%.
The order book has fallen further from £2.2bn to £2bn, while underlying prices are now around 2% below last year compared with a 1% decline reported in the spring.
Chief executive Jennie Daly said affordability remained stretched and buyers were “highly price conscious”, with transactions taking longer to complete.
“Against a backdrop of continuing market uncertainty in which affordability remains stretched, we are focused on delivering our strategy and generating value from our strong balance sheet and high-quality, well located landbank.
“We are managing the business tightly, controlling costs and building resilience for an improved housing market when it comes.”
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