Taylor Wimpey says performance is 'encouraging'

Housebuilder Taylor Wimpey has said the performance of its UK business has been “encouraging” in recent months while its North American operation has benefited from a “prolonged period of stability”.

In a trading update this morning ahead of its full-year results on 3 March, the housebuilder described 2009 as better than 2008 and said the results would be in line with expectations.

It added: “The group continued its focus on cash generation through the year and, as a result, year end net debt has been reduced to about £750m, substantially below the £1.5bn at 31 December 2008.”

In the UK, its net private reservation rate was 0.55 homes per outlet per week, a 37.5% increase against 0.4 in 2008.

The figures include cancellations, which have fallen from 37.5% in 2008 to 18.7% in 2009.

It completed 10,186 homes in 2009 (2008: 13,394) of which 8,432 were private completions (10,585) and 1,709 were affordable homes (2,751) with 45 joint venture completions (58).

The average selling price for completions in the full-year 2009 increased to £160,000 from £153,000 in the first half, as a result of mix and underlying price inflation.

The company described its order book as “very strong”, ending the year with private reservations up by 62% to 3,048 homes (2008: 1,887 homes).

In North America it completed 4,755 homes in (2008: 5,421), of which 3,347 were in the US (4,212) and 1,408 were in Canada (1,209).

Alongside its peers Persimmon and Bovis Homes, the company warned there were still uncertainties in the market.

It said: “The risks of further weakness in the wider economy and reduced mortgage availability remain. Our operational focus remains on build cost reduction and achieving sales price increases and we are well positioned to deliver an improved operating margin in 2010.”

It added that its £750m debt level meant it had “significant headroom” within its lending covenants and said it did not anticipate making “material” land writedowns for 2009.

Numis analyst Chris Millington said the statement contained “few surprises”.