Taylor Wimpey reduces management but profits still rise
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Taylor Wimpey is reducing its management a bid to drive price points in London and surrounding areas this cost cutting will hope to save £10m in a bid to return the business to 22% operating margins across the board.
The firm is removing a middle tier of operational management throughout the Taylor Wimpey group and reducing its London operating facilities to focus on affordable price points that meet the affordability needs of Londoners.
It is also in consultation on a series of reductions in central and business unit overheads. This will bring £15m in annual operational savings from 2021.
Taylor Wimpey is also on a new land buying spree following a £500m fundraising in June after, agreeing on terms on 70 sites totalling 14,500 plots worth £826m.
Pete Redfern, chief executive, commneted saying: “Operating through the challenges of the last six months has also highlighted opportunities for ongoing efficiency and performance improvement, as our recent investments in systems and processes have performed well.”
He said the business was now expecting to exceed previous profits forecasts for the year with next year’s completions set to return to last year’s level.
He continued highlight the firms priorities.
“The safety of our colleagues, customers, suppliers and subcontractors remains our priority and I am extremely proud of the resilience and commitment shown by our teams. We are now safely operating at close to normal capacity with a product profile well positioned to meet customer demand. Our excellent customer and construction quality scores reflect our drive to deliver a high quality product and service to customers, in a responsible manner.
The trading backdrop remains resilient and the quick recovery of the housing market is testament to the underlying strength of demand and supportive lending backdrop.
We have made good progress in the second half of the year to date, maintaining a robust sales rate and building a strong forward order book. Looking ahead, we are on track to deliver full year 2020 results towards the upper end of market expectations and with strong operational momentum and positive forward indicators, our confidence in 2021 has increased. As a result, assuming the market remains broadly stable, we expect to deliver 2021 operating profit materially above the top end of the current consensus range.
Taylor Wimpey’s order book is up 11% at £3bn compared to last year. This equates to 11,530 homes (2019: 10,486).
The group has also been snapping up land at attractive returns in line with its medium-term operating margin target of 21-22% and with an average return on capital employed of 34%.”
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