Taylor Wimpey looks at job cuts to rein in costs, lowers homebuilding target

BRITISH housebuilder Taylor Wimpey is considering job cuts to keep a lid on costs and will build fewer homes in 2023 than last year as the industry faces sluggish demand.

The company’s actions provide more evidence of a slowdown in the UK housing market, partly in response to a spike in mortgage rates and lower loan availability. Uncertainty over UK interest rates and the impact of high inflation have added to the pressures.

Rival Persimmon has already flagged the tough market conditions in the fourth quarter, and is offering new customers incentives to try to revive demand for homes. Barratt has also said it would build fewer houses in its current fiscal year than last.

Taylor Wimpey said on Friday (Jan 13) it was aiming for annualised savings of around £20 million and cost-cutting efforts would involve lay-offs. The company did not specify the number of potential job cuts.

Homebuilders’ margins have come under pressure as British house prices slid the most since the 2008 global financial crisis, after a strong showing during the pandemic, while soaring energy prices have pushed up construction costs.

Taylor Wimpey said its weekly net private bookings rate dropped to 0.68 homes per outlet for the year ended Dec 31, compared with 0.91 units a year ago.

The FTSE 100 company said its year-end order book – a key measure in gauging short-term sales performance – excluding joint ventures stood at £1.94 billion, compared with £2.55 billion a year earlier.

“While the outlook might be deteriorating, Taylor Wimpey can consider the job done in 2022, despite the economic wobbles which followed the disastrous mini-budget in September,” Richard Hunter, head of markets at interactive investor, said in a note, referring to former prime minister Liz Truss’s budget that caused turmoil in the mortgage market.

Taylor Wimpey said it expected annual operating profit to come in line with company-compiled consensus of about £921 million (S$1.5 billion), close to market estimates it gave in November.

The company, which also has a minor presence in Spain, said it built 14,154 homes in Britain, including joint ventures, in 2022, in line with its production outlook and “broadly similar” to 14,087 units a year ago. REUTERS