Flat house prices and cost increases weigh on Taylor Wimpey

Flat house prices and surging costs have weighed down on housebuilder Taylor Wimpey’s annual profits.

Shares in the FTSE 100 firm slipped in early trading after it said volumes increases were weighed down by higher costs amid prolonged Brexit uncertainty in 2019.

The company said underlying pre-tax profits fell 4.1% to £821.6 million as margins slumped.

Nevertheless, the company saw revenue increase by 6.4% to £4.3 billion as total completions including joint ventures rose by 5%.

The housebuilder also said the current year has “started well”, with an improvement in consumer demand on the back of a clearer political outlook following December’s election.

It said it had a “strong” UK order book at the start of 2020, with forward orders for 9,725 units worth £2.1 billion at the turn of the year.

Pete Redfern, chief executive of the company, said: “During the year, we continued to strengthen our business and build a sustainable advantage, improving our core customer proposition and business flexibility through investments in customer service, quality, build capacity and direct labour.

“These investments will strengthen the business for the long term.

“In 2020, we will focus on further embedding and leveraging these improvements across the business while increasing our focus on cost discipline and process simplification.”

William Ryder, equity analyst at Hargreaves Lansdown, said: “Taylor’s results have been squeezed by stagnant prices at one end and rising costs at the other.

“This is a tough combination, and has driven margins below the group’s target range of 21-22%.

“While management is at the mercy of market prices for skilled labour and raw materials, investors will be hoping costs can be kept in check.”

Shares in the company slipped 4.2% to 209.7p on Wednesday morning.