Taylor Wimpey Earnings: Build Cost Inflation Headed in the Right Direction; Shares Cheap

Taylor Wimpey’s performance in the first half of 2023 provided us with few surprises, with the no-moat homebuilder delivering 5,120 home completions, EBIT of GBP 236 million, and is broadly tracking our full-year expectations. Investors were nonetheless pleased by the result—sending shares 4% higher—likely reassured by Taylor Wimpey’s modestly upgraded volume guidance and a resilient year-to-date average selling price amid challenging housing market conditions. Taylor Wimpey expects to deliver full-year home completions toward the upper end 10,000–10,500 in 2023—tracking our full-year expectations and upgraded from a prior guidance range of 9,000–10,500 homes. Confirmation that build cost inflation is beginning to ease from its heightened level of early 2023 was likely of further comfort to investors. Our full-year 2023 expectations remain broadly unchanged. Still, we tweak our full-year EBIT forecast lower by 4% to GBP 451 million with land cost recoveries shaping up to be less favourable than we’d previously credited.