LONDON -- Taylor Wimpey this morning released its trading update ahead of full-year results, and lauded a successful strategic implementation.
The homebuilder forecasts operating profit to rise over 40%, with operating margin ahead of that reported for both the first half of 2012 and 2011 full year (H1 2012: 11.1%, FY 2011: 8.8%).
Benefiting from the "Funding For Lending" scheme, some major lenders have recently reduced their rates as mortgage availability remains restricted, and that spells good news for the homebuilding sector and the company -- Taylor Wimpey purchased 1,203 homes under the government's "FirstBuy" scheme in 2012.
The firm's average selling price increased 6% to £181,000 compared to 2011's average price of £171,000. One cause management highlighted was the "enhanced quality of locations." Home completions increased 7% to 10,886 (including its share of joint-venture completions) up from 10,180 in 2011, with a slight decline in affordable housing completions (18% against 2011's 20%).
Chief executive Pete Redfern commented:
2012 was another year of significant progress for Taylor Wimpey with an increase of over 40% in Group operating profit. We are delivering on the strategy that we set out in 2011, including a return to U.K. double digit operating margin ahead of schedule. As we look forward to 2013, we are confident that we will continue to deliver against our key objectives and target further improvement.
The company's order book is in a strong position as well, with an increase of 14% in value to £948 million as at Dec. 31, 2012 (Dec. 31, 2011: £835 million), representing 5,966 homes (Dec. 31, 2011: 5,379 homes).
Unsurprisingly, Taylor Wimpey's strategy for the year ahead is much the same as the one for 2012: actively managing its level of land investment in line with the housing market. During 2012, the homebuilder approved the purchase of 14,172 new plots on 112 new sites (2011: 11,756 plots on 106 new sites), and enters 2013 with 328 outlets (Dec. 31, 2011: 314).
Shares remained reasonable stable on the news this morning, with little change in early morning trade. They can currently be bought for around 74.10 pence, which is a massive sixfold gain on their five-year low back in 2009 of 11.7 pence. Since then, the share price has increased year on year, and forecasts are for the trend to continue.
The homebuilding sector is cyclical: When the market is on a bull run, and the economy looks like it's making a good recovery, then companies like Taylor Wimpey prosper. If you are keen to benefit likewise, this free Motley Fool report -- "10 Steps to Making a Million in the Market" -- can help you on your way.
The report explains how tracking down small, dynamic companies is a vital step on the path to the magic million milestone. You never know, the next Taylor Wimpey could be out there right now ready to transform your wealth! Click here to get it completely free.
The article Profit Boost Forecast for Taylor Wimpey originally appeared on Fool.com.
Sam Robson has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.