Rise in Taylor Wimpey sales lifts margins

City A.M. Reporter
HOUSEBUILDER Taylor Wimpey said yesterday that sales rates in recent weeks have been encouraging, as the industry has benefited from a seasonal surge in home buying activity.

The FTSE 250-listed firm added it is on track to deliver on margin targets this year.

The country’s second largest builder by market value said net sales rates so far in the second half are above last year’s comparisons, but noted that the numbers for the period last year were relatively weak.

Taylor Wimpey said in a statement ahead of an analyst presentation that it is on track to deliver a double-digit operating margin in the UK in 2012.

A bid to cut costs and improve the product mix lifted Taylor Wimpey’s margins in the first half, beating analyst expectations and helping drive profitability.

The firm told analysts that it will prioritise further margin growth over an improvement in volumes.

It listed long-term headwinds for its margin growth as possible increased regulation on housebuilders and the rising cost of materials.

However, it said its strategic land bank of 19,000 gross acres is expected to boost margins both immediately and over the long term.

Last week homebuilder Barratt said it expected to make further progress in a tough housing market after reporting a full-year pre-tax profit at the higher end of expectations.

The housing industry has been struggling to pick up since the financial crisis, with many consumers reluctant to borrow heavily to buy property while the important first-time buyer market has been shut-down by high-deposit requirements from mortgage lenders.