£100 million share buyback looms at Taylor Wimpey after ‘excellent’ 2021

·3-min read
A Taylor Wimpey house under construction  (PA Media)
A Taylor Wimpey house under construction (PA Media)

Housebuilder Taylor Wimpey has told investors to expect a share buyback in the coming months after what CEO Pete Redfern called an “excellent” 2021.

In a trading update, Taylor Wimpey said it “remains committed” to returning excess cash to shareholders and will announce a payout alongside full-year results in March.

“It is the Board’s current intention to return this cash by way of a share buyback, however the final method of return will be determined at the time of the full year results in light of prevailing circumstances,” the company said.

The exact size of the potential payout wasn’t given but analysts at UBS said it could be around £100 million.

Taylor Wimpey had £837 million on its balance sheet at year end, up from £719 million a year earlier.

Payout plans come after a strong year for sales and completions. Home completions jumped by 47% to 14,087 as pandemic disruption eased. The company sold on average 0.91 homes per outlet per week, up from 0.76 in 2020, and the average selling price rose by 3% to £332,000. The company’s order book stood at £2.55 billion at the end of the year.

CEO Redfern told the Standard: “It’s been a very good year for the business but I wouldn’t want to ignore the fact it’s been a tough year for our teams.

“Getting material availability and getting it in the right place to build houses has been tough. We’ve been pleased with how the teams have performed, really making that work.”

Taylor Wimpey said rising house prices “fully offset build cost inflation amidst wider industry pressure on the cost and availability of certain materials.”

Redfern said inflation peaked in summer and while it “continues to be tough,” it appears “the worst is over.”

The company said it was on track to meet forecasts with full-year results, following several upgrades in the first half of the year.

House builder shares have been rocked by recent a government announcement regarding the cladding scandal. Housing secretary Micheal Gove ordered the industry to come up with fully costed plans to fix issues with their buildings by March and has told them to collectively contribute £4 billion to a redress fund.

Taylor Wimpey set aside £125 million last March to fund fire safety improvement work on all its buildings over the last 20 years.

It said today: “We believe that the provision we have taken remains a reasonable estimate of these costs. We continue to believe this is an industry wide issue that needs an industry wide solution and will continue to work with Government to try to help resolve these wider issues.”

Redfern, who will shortly be retiring after 15 years in charge, said: “We’ve already been hit twice because we’ve already committed to putting any Taylor Wimpey building up to current regulations, not just at the time they were built, and we’ve already seen the 4% tax that was introduced on the industry as a whole.

“None of us would question that lease holders shouldn’t pay and none of us would question that we need a solution that is industry wide and the industry is obviously very broad. Material suppliers, the regulatory part of the industry, architects — all have a role in this. Everybody wants to find an answer that works.”

He was optimistic on the prospects for the business in 2022, saying: “We started investing in land right at the end of the first lockdown before anyone else and that’s really come through onto the balance sheet in 2021 and leaves the business well set up for growth. That, and a strong order book in a good housing market, leaves the business in a good place.”

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