Taylor Wimpey expects to post an operating profit of about £470m this year, despite the slowdown in the housing market.
A trading update from the company said its profit would be at the higher end of its previously predicted range, which it attributed to close cost control, including through “highly selective” land buying.
The figure is just over half of the £923.4m operating profit it achieved in 2022, amid a housing market slump largely prompted by the highest interest rates in 15 years.
Taylor Wimpey has not achieved such a comparatively low level of operating profit since 2020, when its profit dipped to £300m after sites were closed for part of the year as the Covid-19 pandemic took hold.
In its latest update, the company said it expects to end 2023 with net cash of between £500m and £650m, after returning £338m in dividends.
Chief executive Jennie Daly said: “This performance is testament to the hard work of our experienced teams, who have continued to adapt and support customers through their buying journey while being focused on delivering efficiencies across the business.
“Looking ahead, while the market backdrop remains uncertain, we are confident in the medium-to-long-term sector fundamentals, with a meaningful supply and demand imbalance in UK housing.”
Andy Murphy, a director at investment consultancy Edison Group, noted that Taylor Wimpey’s cautious approach saw it reduce its output from 14,154 homes in 2022 to about 10,000 this year.
He added: “Fortuitously, the company was already in possession of a large land bank of around 140,000 plots at the beginning of the year, lessening the need for asset acquisition at inflated prices.
“With the stalling of mortgage rates and inflation, the continued undersupply of housing in London and the South East, and a slight rise in house prices in October, the residential property sector can end 2023 with cautious optimism. From these results, Taylor Wimpey seems to have successfully ridden out the storm.”
Profits at other housebuilders have also fallen this year amid the market slump, including at Bellway, Crest Nicholson and Vistry, where 200 staff were made redundant as a result.