Taylor Wimpey Plc (TW/), the U.K.’s second-largest homebuilder by volume, said its 2012 operating profit rose by more than 40 percent, at the upper end of the company’s expectations, as margins widened.
Taylor Wimpey completed 10,886 homes in 2012, up from 10,180 a year earlier, and the average selling price rose 6 percent to 181,000 pounds ($292,000), the London-based company said in a statement today. Lower mortgage rates will help homebuyers this year, even though loans are still difficult to obtain, the company said.
“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,” Chief Executive Officer Pete Redfern said in the statement. The operating margin for all of 2012 exceeded the first-half figure of 11.1 percent, Taylor Wimpey said.
Home sales growth by volume will probably slow this year from the 7 percent increase seen in 2012, Redfern said on a conference call. He predicted a “low single digit” gain.
Mortgage lending has been slow to recover from the financial crisis as lenders clean up their balance sheets and the U.K. economy struggles to recover from a double-dip recession. Homebuilders are benefiting from the Bank of England’s Funding for Lending Scheme, which helps banks offer loans at more affordable rates.
Such initiatives “protect the group, in part, from any shocks in the mortgage market,” Anthony Codling and Sam Cullen of Jefferies Group Inc. said in a note to investors today. The analysts, who have a buy rating on the stock, raised their estimates for pretax profit by 6 percent for 2013 and 3 percent for 2014.
Taylor Wimpey fell 1.6 percent to 73.05 pence at the 4:30 p.m. close of trading in London, the biggest decline among stocks in the Bloomberg EMEA Homebuilders Index. On Jan. 11, the shares closed at the highest since May 2008.
Before today, Taylor Wimpey had risen 92 percent in 12 months, the second-best performance in the index after Barratt Developments Plc (BDEV), the biggest U.K. homebuilder by volume. The index was up about 80 percent in the period.
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