TWOD Taylor Woodrow

RNS Number:1673H
Taylor Woodrow PLC
10 January 2005



                               TAYLOR WOODROW PLC

                               Trading Statement

* Housing completions 13,091, up 21% on last year
* Housing order book #1,130m, up 2% on last year
* Strong cash generation, with net debt reduced to under #600m (down from
  #743m at 31st December 2003)
* Record profits, at the lower end of market expectations*

Commenting on trading through 2004, Iain Napier, Chief Executive, stated:

2004 has been another year of good progress for Taylor Woodrow. The successful
integration of Wilson Connolly and our investment strategy in North America have
delivered record levels of home completions and profits. Looking ahead, the
continued strength of our international operations provides us with channels for
growth while in the UK we are well placed to respond to an improvement in
consumer confidence.

The full trading statement is below.

* Note: Estimated consensus 2004 PBT (post exceptionals, post goodwill), is
#402.2m, with a high of #411.3m and a low of #387.5m.



Taylor Woodrow plc, the international housing and development company, today
issues an update on trading for the year ended 31st December 2004. Preliminary
results will be announced on 1st March 2005.

Introduction

2004 has been another record year for Taylor Woodrow. Housing completions grew
by 21% to 13,091 as we successfully integrated Wilson Connolly and grew our
international operations. The benefits of our portfolio investment strategy have
been apparent in a period when UK markets have weakened relative to previous
years, but our North American operations have continued to perform very
strongly. As a result, our total housing order book at 31st December was 2%
ahead of the previous year at #1,130m.

We expect to confirm a year of record profits at the lower end of current market
expectations when we report our results for the year to 31st December 2004.


UK Housing

Home completions in 2004 were 9,053, up 18% on last year, but below our previous
expectations. This was a result of continuing uncertainty over house prices, a
consequent cautious approach by house buyers and a reluctance to chase volume.
As we noted in October, customers are taking longer to commit than earlier in
the year.

Visitor levels were up slightly in the first half of the year, but down about
10% in the second half. Visitor levels to our sites in the last 6 weeks of the
year were actually ahead of 2003 however, suggesting consumers remain very
interested in new homes and that latent demand exists in the market.

In the first half of the year, net reservations per site were slightly ahead of
the same period last year, but in the second half were significantly below last
year, broadly in line with the market. Competitive pressure has increased in the
last few months and this has led to a greater use of incentives in the market.

Our average selling prices increased by 9% to #197k. Prices for new homes have
been less volatile than the overall housing market. In the last few months, when
the prices of existing houses are reported to have fallen, we have seen new home
prices remain broadly stable, reflecting the value for money offered by new
housing.

Our approach in this market has been to be prudent in land buying, manage
inventory, and protect margins through cost control.

* We increased our hurdle rates for land buying in March 2003 and again in
  July 2004 in order to limit exposure to an over inflating land market. As a
  result of this approach, we are likely to have on average approximately 200
  selling sites in 2005 (versus 213 in 2004), with greater weighting of site
  openings towards the second half of the year and some larger sites giving us
  better volume opportunities. We have recently seen some stabilisation in the
  land market and continue to pursue opportunities where we see value.

* We have made good progress in managing our supply chain by using our
  purchasing scale, rationalising the number of suppliers and working with them 
  to reduce unit costs and wastage. As a result, we have been able to keep 
  material costs below inflation. Labour rates continue to rise ahead of general 
  inflation due to the high level of activity in the construction market at 
  large, although we are working with our subcontractors to manage overall costs 
  down.

The integration of Wilson Connolly was achieved ahead of schedule and remains on
target to achieve #25m synergies in a full year. Full year operating margins for
the combined business will show improvement over the 2003 pro forma level.

Our forward order book at 31st December 2004 was #407m, representing 21% of 2004
volume.

At the year end, the UK housing landbank consisted of approximately 33,000 owned
or controlled plots with outline planning permission (compared to 34,918 at the
end of 2003), representing some 3.6 years' supply. Of these, approximately 9,100
have detailed or outline planning permission for development in 2005.

Looking forward, we believe the fundamentals of the market remain good,
particularly given the health of the economy, continuing low interest rates and
the substantial undersupply of housing. The company has a balanced spread across
all regions of the market. We expect that consumers will remain cautious in the
first half of 2005, and have planned our site openings in anticipation of a pick
up in activity in the second half.


North America

Total home completions in 2004 were 3,634, up 30% on 2003, with all regions
growing volumes and profits.

Average selling prices for home completions increased by 10% to US$375k. The
increase reflects the strength of our products in their local markets and the
impact of our successful move upwards towards the mid-market in Arizona.

All regions have performed well. The Arizona operation, which we purchased in
2002, continues to exceed expectations. In California, we have now largely
completed our product repositioning down towards the mid market, and as a result
have achieved strong volume and profit growth. In Canada, the low rise market
has remained good, and the high rise market has recovered. In Florida we have
seen good growth in both our low rise and high rise businesses. Texas continues
to perform well.

Our forward order book at 31st December 2004 was at a record level of US$1,246m,
an increase of 57%. Approximately half the increase was contributed by our new
waterfront condominium business in Florida, which is extensively pre-sold and
will start to deliver a strong profit contribution in the second half of 2005.

In line with our previously stated strategy of investing in North America, we
are likely to have approximately 10% more sites on average in 2005 than in 2004.
At the year end, the North America housing landbank consisted of over 30,000
owned or controlled plots with outline planning permission (up 17% on the year),
representing some 5.1 years' supply.


Spain and Gibraltar

Our housing operations in Spain and Gibraltar have continued to perform well,
with 404 home completions, up 18% on last year. Average sales prices were #177k,
down 5% on last year due to changes in mix. The forward order book at 31st
December 2004 was #75m, 15% higher than last year.


Construction

Construction has continued to perform steadily in 2004 and enters 2005 with a
forward order book of #815m, up 4% on last year. This figure excludes #375m
relating to the St Helens PFI Hospital project where we have been appointed as
the preferred bidder.


Cash position

At the end of the year, we had reduced net debt to under #600m after completing
the share buyback of #50m during 2005. Our 2005 cash position will be further
improved by the sale of the K2 development for #117m.


Summary

2004 has been another good year and our record Group order book positions us
well for 2005. The strategy of balancing our housing business between the UK and
North America provides us with continued growth opportunities. In the UK,
although the market is uncertain, we remain cautiously optimistic and are well
placed to respond to an improvement in consumer confidence. In North America we
anticipate another year of substantial growth.

                                    - ends -



For further information:

Taylor Woodrow Investor Relations:
John Holland-Kaye - Tel: 07816 517 200

Taylor Woodrow Media Enquiries:
Ian Morris - Tel: 0121 600 8520 / 07816 518 767

Maitland Consultancy:
William Clutterbuck / Emma Burdett - Tel: 020 7379 5151



                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
TSTQBLBFEFBXBBD

Taylor Woodrow (LSE:TWOD)
Historical Stock Chart
From Jun 2024 to Jul 2024

Taylor Woodrow (LSE:TWOD)
Historical Stock Chart
From Jul 2023 to Jul 2024