Taylor Woodrow: as safe as houses

The company should see the fruits of a strong performance when it announces its preliminary results on Tuesday. Before going into its closed period, Taylor Woodrow outlined what it expects to say on 4 March and the details should please investors.

The company is trading in line with expectations and a strong housing market in both the UK and the US should see a significant increase in revenues. While the company is involved in commercial ventures, it is the strength of housing that has pushed the company along. Housing is expected to account for up to 80% of the operating profits.

Under its Bryant brand, the firm has built around 6,000 homes in the UK during the past year and sale prices are thought to be around 12.5% higher in 2002 than they were a year ago. Its forward order book for 2003 was worth £237m at the end of the year, 20% higher than the same time in 2001.

The company is also implementing changes to its UK business, which should simplify and refocus the structure of the company. It is expected that these changes will cut costs by £21m.

Taylor Woodrow’s US business currently has less projects than its UK counterpart, with just 1,800 buildings finished in 2002, an increase of 17% on the year and its order book on 1 December 2002 was worth £277m, more than its UK division.

It is in the US market that Taylor Woodrow sees most of its potential for the coming year. It believes the UK market is becoming ever more constrained in terms of land availability, a problem the US does not have. Sales across the Atlantic are exceeding the company’s expectations.

While housing is Taylor Woodrow’s staple source of income, it does still have a significant commercial business. However it has had a quiet six months and the company is now being more selective in its dealings there.

While 2002 looks to have been a fruitful year for the business, 2003 could prove more of a challenge for finance director Peter Johnson and chief executive Iain Napier. Talk in the UK is of a drop in housing prices, which could impact the company’s bottom line but Taylor Woodrow believes it is well prepared to see through any tough period.

‘The housing markets in both the UK and North America have remained strong throughout the year,’ said Napier. ‘With good order books and detailed plans to reduce our overheads, we are well placed for another year of profitable growth.’

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