A rise in costs on new tenders has forced Taylor Wimpey to revise up its financial provision for cladding fire safety work in the future by tens of millions of pounds.
“We have reassessed the remediation costs based on tenders received in the first half,” said chief executive Jennie Daly. “Based on this updated information and enhanced cost appraisal, the expected fire safety remediation cost has increased by £88 million, taking the total provision to date to £333 million.”
It comes after the house builder had already allocated £245 million for fire safety remediation works for its entire stock since 2022 amid government pressure, around double what it was just a few years ago.
Daly added: “The increase is due to escalation of costs based on recent tenders, increased project delivery administration costs, including the funding of the Building Safety Fund pre-tender costs and a small number of new buildings being added.”
During the first half of the year Taylor Wimpey progressed work on affected buildings with building owners, management companies and leaseholders, adding it remains committed to resolving issues as soon as practicable.
Currently, it has 211 buildings within the scope of its provision, all of which have been assessed by its specialist team, it said.
The house builder also declared a drop in turnover and operating profit for the half year to 30 June 2024, as it seeks to improve its position next year with a more “supportive market”.
Revenue for the period was £1.5 billion, down 7.3 per cent from the £1.6 billion achieved in the same financial period last year, generating a pre-tax profit of £99.7 million (H12023: £237.7 million).
The house builder generated an operating profit of £182.3 million, down 22.6 per cent on the prior period (£235.6 million), and an operating profit margin of 12 per cent (H12023: 14.4 per cent).
Taylor Wimpey also saw a 10.8 per cent decrease in its net cash position from £654.9 million for the half year to 30 June 2023 to £584 million this year.
Home completions, including with joint venture partners, came down slightly in the period to 4,728 compared to 5,120 in H12023.
Looking to the second half, the house builder said it expects to deliver up to 10,000 home completions in the UK and an operating profit of £416 million.
Daly said: “Taylor Wimpey is a strong and agile business with a sharp operational focus. With the benefit of our high-quality landbank and strong financial position, we are well positioned for growth from 2025, assuming supportive market conditions.”
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