HOUSEBUILDER Taylor Wimpey yesterday raised its profit margin forecast for 2014 and said it expects profitability will return to long-run levels the year after, helped by government schemes to encourage house-buying.
The company, which like rivals saw profitability slide during a long and deep recession, said its 2014 operating profit margin could improve by 200-300 basis points, up from a previous forecast rise of 100-200 basis points.
In its latest results for the 2012 financial year, Taylor Wimpey reported a margin of 11.5 per cent and analysts expect it to post a 2013 margin of 13.5 per cent. The raised forecasts indicates a 2014 margin of 15.5-16.5 per cent.
“Seventeen per cent is what we would see as a long run norm, where the business has probably recovered from the market conditions we’ve been through ... We’d expect to be at that 17 per cent norm in 2015,” chief executive Pete Redfern said.
“By saying (the 2014 forecast) this early in the reporting cycle, we're giving people a sense of confidence,” he said.
Taylor Wimpey and other housebuilders have been big beneficiaries of government schemes to help Britons purchase homes with deposits as small as five per cent and have seen their profits also improve as they build on land that they snapped up cheaply during the recession.
The company said it had sold off all the homes it was building this year, and had so far sold 30 per cent of the homes it will be building next year. Its current total order book comprises of 7,557 homes with a value of £1.5bn.