Taylor Wimpey's profits dip as margins face pressure
Taylor Wimpey's shares dropped on Wednesday as the housebuilder reported a drop in interim profits due to higher costs and a fall in margins.
FTSE 100
7,895.85
16:59 19/04/24
FTSE 350
4,341.08
17:09 19/04/24
FTSE All-Share
4,296.41
17:08 19/04/24
Household Goods & Home Construction
12,287.29
17:10 19/04/24
Taylor Wimpey
130.75p
17:03 19/04/24
The FTSE 100 traded company reported profit before tax of £299.8m, down from £331.0m before exceptional items in the same period last year, as cost of sales increased by 4% to £1.3bn and operating profit margins fell from 20% to 18%.
The effects of rising costs have been felt across the construction industry as higher demand for building materials eats into profits.
However, revenue edged 1% higher to £1.7bn and volumes also increased, with the company having completed 6,541 homes in the first six months of the year, compared with 6,497 in the first half of 2018.
Despite the fall in profits, the company announced an interim dividend of 3.84 pence per share, up from 2.44p, and a 2020 special dividend of 11p set to be paid in July next year.
Taylor Wimpey maintained its full-year guidance for a slight increase in volumes, but acknowledged that margins will fall below the levels seen last year and said the business is being run "cautiously" against the backdrop of ongoing political and macro-uncertainty.
"We are well positioned with a strong order book and balance sheet and as a network of local businesses, most of our materials are UK-sourced. We have been working with our suppliers to understand and mitigate the risk in their supply chains from an uncertain Brexit outcome and utilising our internal logistics arm, Taylor Wimpey Logistics, which provides additional visibility, control and flexibility in managing our supply chain," said the company.
Taylor Wimpey's shares were down 5.68% at 166.53p at 0934 BST.