Taylor Wimpey sales up, but margin squeezed
Housebuilder Taylor Wimpey has reported a decline in its margin, amid rising build costs, despite an uptick in sales.
In a trading statement ahead of its full-year results, the FTSE 100 company revealed an operating profit margin of 19.6% for 2019.
This compares with a margin of 21.6% in 2018, with construction cost inflation eating into its profits.
Housebuilder Taylor Wimpey has reported a decline in its margin, amid rising build costs, despite an uptick in sales.
In a trading statement ahead of its full-year results, the FTSE 100 company revealed an operating profit margin of 19.6% for 2019.
This compares with a margin of 21.6% in 2018, with construction cost inflation eating into its profits.
It reported a return on net operating assets of 31%, against 33.4% for 2018.
Taylor Wimpey has previously complained of these costs combined with a geographical shift in sales squeezing profit margins.
The statement said build costs had risen by 4.5% over the year, but noted this has weakened in recent months.
The trading update pointed to “more challenging conditions in London and the South East” at higher price points.
In 2019, total home completions were up 5% to 15,719, including joint ventures and bulk sales. Of these, 23% where affordable homes. The average selling price for private sales climbed from £302,000 to £305,000.
According to Savills, the UK housing market in the South East fell by £5bn last year, as a result of limited affordability and low levels of development. This compares with increases in every other region, with a combined rise in value of £107bn.
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