Half-year results reveal a 50% increase in operating profit.
Taylor Wimpey (LSE: TW), the homebuilding company with residential developments in the UK and Spain, saw its share price boosted to 45.3p, a jump of 1.1p or 2.5% on the back of some very encouraging results for the six months to 1 July 2012.
Group operating profit increased by 50% to £100.9 million with pre-exceptional profit before tax increasing by 171% to £78.2m. This profit has been achieved by selling more properties and at a higher margin, which has increased to 11.1% from 8.2% in 2011 with the average selling price of their properties now increasing by 4.8% to £176k and completions up to 5,083, an 8% increase.
The homebuilding sector is fighting the general malaise in demand for property and investors can be pleased that Taylor Wimpey is performing strongly alongside the likes of Barratt (LSE: BDEV), Bellway (LSE: BWY), Persimmon (LSE: PSN) and Bovis (LSE:BVS).
The company have focused on obtaining customers in the current uncertain market with initiatives such as the NewBuy and the government-backed FirstBuy scheme. Part-exchange is also offered on many properties although Taylor Wimpey are selective regarding the properties it will take and generally will offer a significant discount on the property offered up for exchange. Additionally, appealing incentives in the form of cash discounts and free optional extras are offered to entice potential purchasers.
Additionally, customer satisfaction has increased to 91.8% from 89.5% in 2011, which underlines the five-star rating the company received in the Home Builders Federation's survey.
Looking forward, 6,890 new plots have been approved for purchase, an increase of 30%, and planning consents have been achieved on 1,565 plots.
An interim dividend was announced of 0.19p per share from the cash reserves of £123.8m.
Pete Redfern, chief executive, said:
"I am very pleased to report another period of strong financial and operating performance. We've seen improvements across the business driven by our continued focus on prioritising margin growth and return on capital.
"Although wider economic conditions remain uncertain, we have been reassured by the continued stability in trading conditions and the strength of our order book.
"Looking ahead, we expect to deliver further improvements in performance across all key metrics."
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> Barry does not own any of the shares mentioned in this article.