Taylor Wimpey plc

Hello, everyone. Thank you for attending today's trading update call. My name is Ken, and I will be your moderator today. All nights will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to our host, Jenny Daly, to begin. Please go ahead.

Thank you, Ken. Good morning everyone and thank you for joining the call. As usual, I'm joined by Chris Kearney. I'll start with a few quick words before opening up for your questions. You'll have seen from the statements that trading in the year so far has been steady, only slightly down on a strong comparator at this point last year. Nevertheless, we are not immune to the uncertainty and challenges posed by the macro backdrop and I'll talk about this shortly. Suffice to say, our excellent sales teams remain focused on driving our database and supporting customers through their buying journeys. Our net private sales rate for the year to date was 0.74 per outlet per week compared to 0.77 at the same point last year, with a cancellation rate of 14%. Excluding bulk sales, our net private sales rate for the year to date is 0.73 per outlet per week compared to 0.76 at the same point last year. Our total order book stands at £2.2 billion compared to £2.3 billion at the same point last year, representing around 7,700 homes compared to around 8,200 homes. The pricing environment has been more challenging in recent weeks, particularly in the south of England, where affordability is more stretched and overall pricing in the order book is now around 1% lower year on year. You'll recall that at the start of the year we talked about a proactive approach, particularly in London, where we were working our way out of certain apartment schemes. And it's fair to say that some of this pricing weakness reflects decisions taken here to make sure we keep recycling capital in line with our strategic goals. Elsewhere, pricing is softer with some geographies, particularly in the north, being more resilient than others, as you would expect. Overall, and encouragingly, new customer visits to sites and engagement remains pretty consistent throughout the spring selling season, helped by increased sales and marketing spend. As we discussed at full year, we are seeing customers visiting sales centres multiple times before making buying decisions, and given the outlook for prolonged higher interest rates this year, they are deal and incentive focused. Cancellation rates to date also remain consistent with recent experience. Another area of focus, given the backdrop, is build costs. In terms of our suppliers, as we said at the full year, we've negotiated strongly on contracts for this year with some success, but are seeing increasing requests for price increases and surcharges due to rising energy and fuel costs as a result of the conflict. In that context, and it is still relatively early in the year, The outlook for bill cost inflation in 2026 is now perhaps more like low to mid single digit rather than the low single digit I talked about when I spoke to you at our full year results. Of course we continue to scrutinise all supplier requests closely and work to defer and mitigate increases where possible. So it is hard to call it right now. The duration of the conflict will be a key determinant but this is what we're seeing currently and of course we will keep you updated as we move through the year. I am going to make good progress with the share buyback programme and as at the close of business on 24 April 2026 have purchased 39 million shares equating to 34.9 million of the planned 52 million which we continue to expect to complete in the first half. Pleasingly we continue to see good progress on planning and are prioritising outlet openings In the year to date, we operated from an average of 219 sales outlets compared to 208 for the same period last year and are currently operating from 218 and on track to open more outlets in 2026 and in 2025. We are taking a highly selective approach to land buying given the backdrop and have approved around 1,000 plots in the year to date compared to around 1,700 plots at the same point last year. But our strong land position positions It gives us some flexibility here and we will see how market conditions evolve going forward. When we set out our guidance for 2026 at the prelims, we were very clear that it did not assume any impact from the situation in the Middle East. At that point, it was an emerging event with a high degree of uncertainty around how it might develop. Since then, it's fair to say that market conditions have become more challenging. Bringing that together, while we're not setting revised guidance today, we are being open with you about what we're seeing on the ground. For the first half, we now expect UK volumes to come in slightly ahead of our previous half-won guidance. That said, the pricing and cost pressures I mentioned earlier more than offset this benefit, so we now expect half-won profitability to be slightly below our prior expectations. The increased uncertainty means that there are a wider range of potential outcomes for the full year 2026 than we were previously planning for and a lot will now depend on how long the conflict persists and the implications that has for both interest rates and consumer confidence. We will update you further in the interim results when the outlook for 2026 will be clearer. For now, we are facing into this uncertainty, laser focus on keeping a tight rein of what we can control staying close to the customer, making proactive choices where we believe it's the right thing to do and tightly managing costs and I want to thank our teams in this regard for their strong operational discipline. We remain confident that we have highly experienced teams in place, great product, excellent land position and the right strategy and we will remain agile to respond to changing conditions to optimise performance in all markets. So thank you for that and I'll now open up for your questions.

Thank you. If you would like to ask a question, please press star fold by one on your telephone keypad. To remove your question, please press star fold by two. Again, to ask a question, please press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question. We'll pause here briefly as questions are registered. Thank you. We have our first question from Carlos Caruso from Kapla. Please go ahead.

Hi, Jenny. Hi, Chris. Hi. Thank you for taking our questions. Just one from my side. And I apologize because I know you said you don't want to speak about guidance. But, I mean, in today's string update, you have not reiterated the full year conditions target, which, I mean, could raise some concerns given the current macroeconomic backdrop. And at the same time, you've said that pricing and bill cost inflation will be worse than what you were previously expecting. So, I mean, can you please shed some light on the potential impact this could have on the £400 million operating profit target? Thank you.

Thank you, Carlos. I'll hand over to Chris.

Yeah, thanks, Carlos. So, you know, we're not setting revised guidance today. When we set out our 2026 guidance of the prelims, as Jenny said, it assumed no impact from the situation in Middle East. And I can understand, you know, there might be a bit of frustration by this, but, you know, uncertainty has clearly increased, which inevitably means a wider range of potential outcomes But we are trying to be helpful in the statement as well. So, you know, pricing in the current order book is around 1% down year on year. In January, we said it was down about half a percent, which implies that the pricing on more recent sales has softened a little further. And on that basis, the current run rate price thing is around 1.5% down, weighted towards the south. And from here, the direction is hard to call with several moving parts in play. On bill costs, we previously guided to low single-digit bill cost inflation for 2026, so say 2% to 3%. That's clearly moved up, and we're now thinking around the 4% for the year as a whole. Given the level of volatility, it could be higher or lower, but that gives you a sense of how we are thinking about this. And then on volumes, just to step back, our net sales rate in both 2024 and 2025 was 0.75. When we set the 10,600 to 11,000 UK volume guidance range at the prelims, we assumed a rate slightly below that at the bottom end and slightly higher at the top end. But the volume guidance wasn't just driven by sales rates alone. We started the year with a small road above it, And the key offset was an expectation that higher outlet numbers would more than offset that and allow us to grow volumes through 2026. If you look at the years of performance and statement, the sales rate, I think, is around 4% behind a strong comparative from last year, while average outlets are higher. So in combination, we're broadly tracking in line with our expectations. That said, since we've had the guidance, both interest rates and mortgage rates have increased, which has weighed on affordability and customer confidence. And cancellation rates are actually pretty good, actually lower than last year, likely reflecting customers with mortgage offers secured pre-March, proceeding with a decent amount of urgency.

Thank you.

Thank you. Thank you. Thank you. We have our next question from Will Jones from Rothschild and Co-weather.

Please go ahead. Thanks. Morning. Maybe three from me, please. First, you described a steady sales rate, but could you just help us with how that pattern has evolved in April and any differences you may or may not be seeing around lead indicators and inquiries and visits and the like? Second, on pricing release to confirm that there's no particular change to the pricing picture in the Midlands and the North. And any sense, perhaps, if you can, on what's left to do on London apartments. And then on build cost ridges, what communications you've had so far from manufacturers and does the vote in the single digit allow for kind of formal price increases being agreed rather than just the delivery surcharges you've seen so far? Thanks.

Okay, thanks for that, Will. I'll take the first two and then Chris will pick up on the build cost. Yeah, so, I mean, we talked about sort of customer engagement remaining resilient. You know, so we have seen sort of good levels of inquiries. You know, it's notable that appointments in particular have held up really, really strongly. I did make it clear in the narrative that we've invested quite strongly in sales and media spend, so that needs to be factored in. What we are seeing, and a bit of a repeat, but maybe more so, of what we said at the full year, customers visiting sites multiple times. There's a high level of infantry. I think it's about 11-year high infantry across the market. There's a lot of choice. There's obviously a lot of macro noise, so customers are cautious, and we can see that flowing through the GFK. So, you know, that's really where that sort of price weakness, particularly weighted to the south and London, is coming in. So, format indicators, you know, generally held up, you know, fairly well. We've seen a bit of a drop-off in recent weeks. It's hard to see through that. Easter was earlier this year than last. We tend to see a bit of a drop off in the weeks following Easter aligning with school holidays. So modest drop off but really not seeing how that develops in the coming weeks. But I would say around the sales pattern that we've seen in the last few weeks is probably being a bit of softening but gradual And again, not unusual given where Easter has fallen at this point. Really, we'll see more in the weeks ahead of us. Around sort of London apartments, I mean, we've been talking about that for a while. And Chris last year in October talked about sort of the unwind and that that was sort of run out to 2029. So we are on exit. We haven't invested in London for a long time, but clearly, The complexity of the schemes, some of the delays that we've seen with BSR and other things have really elongated sort of development there. London's effectively unwinding. It is a diminishing part of the business and a diminishing part of the land bank, but it will take some time for us to exit. And around the Midlands and north, you know, they have remained resilient. There are some pockets of weakness on a location-by-location basis, but they're holding up pretty well.

Yeah, and on bill costs, at our last update, we were feeling reasonably comfortable with how we'd managed bill cost pressure in the early part of the year. Since then, we've seen a shift, as you might expect. We've received a significant number of surcharge and price increase requests from across the supply chain, driven primarily by higher fuel and energy costs. And the proposals range from low single digits to, in some cases, high teens percentages. Now, our default position has been and remains to resist surcharges. We require suppliers to evidence genuine underlying concerns increases to their cost base, and we robustly challenge both the timing and the content. Now, we use our scale and our long-standing relationships to make it clear that costs have to move down as well as up. But that said, we also have to be realistic. And where suppliers are being transparent and are sharing the pain and are prepared to share upside as conditions normalise, then we're prepared to engage constructively. And it's against that context that we're now sort of indicating that the bill cost inflation for the year is higher than our initial expectations. Thanks, Chris.

Thank you. We have our next question from Ainsley Nauman from Investor. Please go ahead.

Thanks very much. I think I've got three, actually. Just going back on the kind of comments that you said were quite helpful around pricing and costs. I mean, is my maths correct if I was to assume kind of where we were at the full-year results and the incremental news you said today on weaker pricing and the cost inflation, that it's kind of around 150 to 200 BIPs? hit to margins back from where we were expecting them to be a few weeks ago and you had the results. Would that be right? So in the EBIT, a 400 million would be down, call it 70 million or so, or 18% to 20% cut from the 400 million, if we just assume what's changed on pricing and cost inflation at this point and the expectation for the full year. That's the first question. Second question, just one, are you taking any cost out? You're kind of reacting to what you're seeing on bill cost inflation and what looks like probably a slower market. And then just any comment around kind of cash, how you're managing that, what your expectation is for the full year based on your new kind of view of where margins and profits go. Thanks.

Thanks, Ainsley. Well, I'll ask Chris to take sort of your first and third questions on the margin and sort of cash. But on cost out, we're a really disciplined business. We run a zero-based budgeting philosophy. We have a history of taking swift action when market conditions change. We are, as ever, focused on cost management and value improvement right across the business. At this point, we're not signalling any immediate structural cost action, but we are focusing on driving those material cost reductions and the engagements that Chris talked about with the surcharging in a really incremental way. We're looking at optimising the opportunities from our logistics business and you know, we'll focus on sort of a range of other sort of simplification improvements across the business. So, you know, really sort of digging in there.

Yeah, Ainsley. And on guidance, look, you know, the reason we're not giving in-year guidance today is simply that there are just still too many moving parts to give you a number that we have confidence in. So, you know, our focus right now is on mitigating downside where we can and understanding how these uncertainties translate into outcomes. And we'll be in a much better position to do that by July, and that's when we intend to give you more colour.

Sorry, just following up on that, Chris. So just following up, on the kind of what you said today compared to what you said at the beginning of the year, though, is it correct to assume that it's kind of an extra 1% on price erosion and, you know, kind of, let's call it 100, 120 pips of erosion due to the higher assumption around build cost inflation. I mean, is that the right way to think about it? If we start with a 400 million of profit four-year guidance, and then we kind of expect, you know, we calculate today roughly 200 pips hit to margin on what you've said incrementally today, is that fair? Yeah.

So Inslee, you know, when we give guidance, it's really important to us that it's meaningful. And with the range of outcomes still very wide and evolving, what we're saying is July is the right point to update when we've got better visibility. On cash, the business, you know, remains in a strong balance sheet position. We guided to net cash at the half year to be in a range of zero to 50 million. we are fully sold for the first half, so assuming those sales rates convert to completions in the usual manner, I'd expect to be towards the top end of that range. You know, probably a bit less land spend, lower land sales receipt than anticipated, but those offset to some extent.

Thank you very much.

Thank you. Thank you. We have our next question from JP Morgan. Please go ahead.

Morning. Thanks for taking my questions. First of all, just on the incentives, can you give an indication of where we are now? I think you were around 6% at the sort of four-year results. And then secondly, on bulk, is there a level that you had assumed for the year? And how do you think about that evolving? And then thirdly, I sort of know you mentioned lower land spend, but I guess that echoes some of your peers have spoken about reducing activity in the land market going forward, given the outlook. Is that something you think you'll follow in a meaningful way? Thank you.

Okay. Thank you. From an instance of, yeah, you're right. At the prelims, we said 6%. I think that we're just a nudge above that at the moment. Regarding folks, our philosophy and approach on folks really hasn't changed. In the year to date, it's slightly ahead, but it's actually a relatively low number. They're hard to plan forward, given the fickleness of that market, and they're also very sensitive to interest rate movements as well. we do have sort of a few perspective but really they're not done until they're done on land I've talked about being highly selective we're obviously monitoring the events on the macro and monitoring the land market sort of carefully at this stage you can see that our approvals year to date are down and that's you know, sort of being proactive around where we are willing to invest at this point, given all of the moving parts that we're talking about this morning.

Great. Thank you.

Thank you. We have on this question coming from Alistair Stewart from Progressive Equity Research. Please go ahead.

Morning, Jenny and Chris. Just is it possible to give a bit more detail on the London apartments position? I know Will asked about it earlier. For instance, can you give a rough idea of the outstanding number of the outstanding apartments? Roughly on discounts, have you contained these to within single digits? Are the apartments clustered around any specific areas? Are there any one or two big developments? And who are you selling to? Is it bulk investors or a mix with individuals?

Okay. I mean, I think the thing that I'd say about London Apartments is to stand back to start with and look at what the, the dynamics of the London market are there's a really high stock of availability in London right across both new and existing markets affordability is constrained we have the post help to buy that equity supported 40% that really supported affordability there's the overlay of investors effectively selling out or seeking to sell out of the market, both as a response to, you know, increasing tax sort of issues on a personal level and then, you know, a degree of the rent reform sort of act flowing through. And I think it's also fair to say that there's a bit of a sentiment sort of overhang from sort of post-Grenfell issues around planning, just, you know, this leaping sort of the apartment market sort of feeling sort of very, very, very heavy, heavy sitting in the market. So that's the backdrop that we're looking at in London. As I mentioned, you know, we have a number of apartment schemes, sort of they're dotted around. So in terms of concentration, Alistair, I don't feel that we're overly exposed to one market. We've got good distribution. They would be in areas that, you know, you and I would have considered to be sort of good prospects. And we're working our way through them. But as I said at the top of the Q&A, it will take a few years to unwind it entirely. There's no sort of response to a specific operator or sort of specific actions by others. We're really following a market that is sort of under pressure for price so I don't feel that we've got a specific issue it's really just how the London market is operating I mentioned that and I think it is important that you understand what the environment is like there but we're not sitting on our hands we are being active and we're making these proactive choices I think consistent with a strategy of redeploying our capitals So we are sort of taking sort of price action in order to move that stock on. It's a mixture of some bulks, but also private sales that we're playing through. So it's really the amalgam that we're leaning into today. And I'm not really going to get drawn into specific sort of numbers, but I think I've given you enough of the sense of... No, you have.

Thanks. Just on one specific point you brought up, did you say overhang of the 40%? Do you mean the London Help to Buy scheme? Is there an overhang? Can you just put a bit more colour on that? I hadn't heard that mentioned before.

Yeah, it's really just in terms of sort of the overall sort of change in affordability that's happened with the withdrawal of the... be helped to buy support which was significant in London has left affordability really very constrained.

I thought you said there was an overhang is there a glut of people who bought under help to buy and wanted to move on but couldn't because they're facing some form of negative equity and I'd

misunderstanding you there well I'm not making any comment at all on negative equity to answer it's really a sense that affordability in London has been supported for a number of years with help to buy and in the absence of that there's now an increasing number of sort of purchases that really just can't make the stretch on affordability fine alright great thank you very much

Thank you. We have our next question coming from Chris Melanson from Deutsche Bank. Please go ahead.

Thank you. Morning, Jenny. Morning, Chris. I'd just like to explore this pricing point a little bit more first. I mean, perhaps you could provide some colour about when pricing starts to go backwards. I vaguely remember that at the start of the year you said you were 0.5% down on the order book, but you caught it up, I think, by kind of springtime. So it suggests there's obviously been quite a lot of incremental movement. And perhaps you could also just comment on pricing, about whether or not the trend's been deteriorating over time, i.e., you know, it's been declining month on month. That's number one. Sorry, it's a bit long. Next one, Chris, you mentioned H1 is likely to be worse than guidance. Can you just remind us what guidance was and what has changed there? And perhaps if you could just link into that, you know, under what circumstances would margins rise from H1 to H2? Because I think there was quite a big movement there in the second half. And then, look, finally, and you probably won't like me asking this, but just a final question on, you know, your thoughts around distribution policy still, if we are looking at profits, which are, again, 20% lower or so. Thank you. Okay, Doug, shall I start with half-blown guidance and distributions and we go back? Yeah. So, you know, just to recap, you know, what we previously said on half-blown performance, Chris, I think in January we flagged that 2026 volumes would be more second-half weighted with around 40% in the first half. And then in March, when we updated, we said half one operating margin would be lower than half one last year, being 2025, reflecting lower pricing in the order book, ongoing build cost inflation, and that second half holding pricing. And at that point, we estimated roughly 30% of the full year operating profit being delivered in half one. So that was 30% of the 400. So So the half-won profit guidance was effectively £120 million. Since then, UK volumes are actually tracking slightly ahead of our previous half-won guidance. However, as today's update shows, pricing pressure and bill cost inflation have both been a bit stronger than we anticipated. I think it's worth noting that consistent with standard industry practice. When we assess cost complete at the site level through our regular valuation process, any increase in cost complete is spread across all the plots on that site from the first legal completion in the period through to the final completion. And that means homes legally completing earlier in the year will still bear their proportion of share of the updated site cost to complete, even where the plot itself was largely billed complete before any supplier surcharge or price increase to expect. So, whilst half one volt units, you know, a little bit better than that 40% estimate, the combined pricing and cost pressure mean that half one profitability is now expected to be slightly softer than we previously anticipated. And then, you know, in terms of capital allocation, you know, obviously a fair question. What I would say is the business is in a good position with a strong balance sheet and low fiduciary gearing. You know, we're holding our AGM later today, and the proxy voting shows very strong support for the payment of the 2025 final dividend in May. And as we have said previously, you know, we keep our distribution policy under regular review, but nothing has changed in terms of our approach or our priorities. And the assessment of the 2026 interim dividend will take place in the coming months, as usual, and we will remain disciplined on that.

Thanks, Chris.

Thank you. We have our next question.

Oh, sorry. No, we have some pricing questions that we didn't get to. So I think there was just a little bit more pricing colour on the timing. So, yeah, so you're quite right. We entered the year this year, and in January we indicated that pricing was, in the order, was down half a percent. That then rolled forward to the prelims. And, you know, in that period, pricing, net pricing, was, you know, broadly flat. And I think that's what we were very clearly saying at that update. And what we've seen since then is a gradual sort of deterioration in pricing as, you know, consumer confidence has sort of weakened and many, you know, our customers have just been more interested in incentives and the deal that they can secure and what we should say as well is all of these decisions are made locally on a site by site basis so what we're aiming to do is strive the best return that we can from each one of those assets, and that's a balance. You know, we've got some locations, generally more towards north of the country, where, you know, we are seeing a reasonably resilient market, and, you know, that strength, you know, allows a slightly different approach. And then, as Jenny's outlined, you know, in the south, that is much more stretched with affordability and so, you know, much more pricing pressure down there. So, yeah, that's the colour, I think.

That's helpful. Thank you. Yes, that's very helpful. Thank you, Chris. Thanks, Jenny.

Thank you. Thank you. We have our last question. Apologies. We have our last question coming from Rebecca Parker from Goldman Sachs. Please go ahead.

Hi. I was just wanting to go back to this pricing discussion. What is attributable here to those London schemes, and have we seen any of the London schemes, I guess, in this, I guess, worsening of pricing come through after your full year results, and what can we kind of see as underlying pricing?

Thanks, Rebecca. Yeah, look, I think there are sort of three parts to this sort of pricing story, you know, and I would say, you know, London, you know, where we are seeing, you know, very price sensitive. You know, I gave you sort of earlier on the Q&A, you know, some of the building blocks of that, you know, very high stock, you know, quite a significant amount of sellers across an existing market so the London specific market is very price sensitive that's more than the wider south east and south and then as Chris has said also we're seeing more resilience the further north we go so there is a London weighting to that pricing element

Thank you. And then just wondering if you're seeing any other inflationary impacts outside of those supply increases, maybe on your admin costs or on labour costs?

So at the moment, the sort of the bell cost sort of inflation story is really focused on materials. We're not seeing sort of movement on the labour side of the equation. We're still in a relatively sort of low volume environment from a supply chain perspective. And, you know, we're not hearing any specific signals around labor costs at this point. But it is worth noting. Thank you. Thank you, Rebecca.

Thank you. I can confirm that there's no further questions.

Okay. Well, thank you very much for your time. I understand that it's a busy morning this morning, and Chris and I look forward to seeing you at the half-year results on the 31st of July. Thank you.

Thank you very much. That concludes today's call. Thank you for your participation, and you may now disconnect your line.