Taylor Wimpey cuts build costs further as profits surge

Aaron Morby 10 years ago
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Taylor Wimpey has become the latest house builder to deliver a big jump in profits on the back of near flat housing completions.

The big improvement came from building out cheaper land and substantial cuts to construction costs.

Pete Redfern, Chief Executive at Taylor Wimpey said: “Having achieved our target of a 10% reduction in private build costs per square foot between the first half of 2009 and the first half of 2010, we have retained our focus on build cost efficiency.

“We have achieved further savings in 2011, with the full-year average private build cost per square foot reduced to £102 (2010: £106).”

He said the majority of the savings were earned from greater efficiency on site and increased standardisation, with the underlying build cost environment remaining broadly flat.

Operating profits for the year jumped 56% to £173m on turnover edging up 2% to £1,780m. The small rise was driven by completions which rose 2.2% to 10,180 as average selling prices remained the same as the previous year.

Taylor Wimpey delivered a sharp rise in operating margin from 6.4% to 9.7%, with its target double digit margin achieved in the last half of the year.

Redfern said: “Our performance is the result of a continued focus on driving value by prioritising a further improvement in margins and return on capital.

“In 2011, we saw significant progress in our operational performance and I am pleased that we have reached our double digit operating margin target ahead of schedule.”

He added: “Our priorities remain value creation and margin improvement ahead of volume growth, and we are achieving further improvement in the margin on sales in our order book.

“While wider economic conditions remain uncertain, the UK has seen a period of continued stability in the underlying housing market and strong growth across a number of areas as shown by our order book.

“We feel well-positioned to deliver further improvement through our value-driven strategy.”

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