Taylor Wimpey has revised its shareholder distribution policy, cutting it to 4% of net assets from the previous 7.5%. This decision reflects the board's prudent move to preserve balance sheet strength and financial flexibility amidst a prolonged housing market downturn. The company aims to optimize shareholder returns through the cycle, acknowledging that reduced expected profitability and cash generation necessitated this change. This move comes as affordability pressures, rising build costs, and increasing regulatory costs continue to weigh on the market. Consequently, the company's shares fell by more than 7%.
The homebuilder also narrowed its full-year UK completion target, excluding joint ventures, to between 10,600 and 10,800 homes, down from the earlier forecast of 10,600 to 11,000. For the six months ended June 28, Taylor Wimpey reported a pretax profit of £116.8 million, a significant improvement from a loss of £92.1 million in the same period last year, which was impacted by a large cladding provision charge. Despite this profit, the company is slowing construction and purchasing fewer land plots as price-conscious buyers delay their purchase decisions. The company's adjusted operating profit for 2026 is expected to fall to around £400 million, largely due to softer pricing in the order book and continued low single-digit build cost inflation.
Chief Executive Jennie Daly stated that the housing market downturn has proven more prolonged than anticipated, with affordability pressures continuing to affect demand. She warned that without measures to stimulate demand and improve development viability, housing output in the UK could fall further. Taylor Wimpey anticipates continued challenging market conditions, with underlying home prices remaining below prior-year levels and full-year build cost inflation projected to be between 3% and 4%. Major UK homebuilders, including Vistry and Berkeley, have also scaled back land acquisitions to conserve cash in the sluggish market. The company ended the year with an order book valued at £1.9 billion, a decrease from £2 billion a year earlier.
In addition to the revised dividend policy, Taylor Wimpey launched a near-£42 million share buyback, which the board believes offers an attractive means of returning capital to shareholders, alongside dividends. Half-year revenue increased to £1.7 billion, though profit adjusted for fire safety work and affordable housing commitments fell by a fifth to £129.7 million. Completions for the group were down 5% year-on-year to 4,986 homes. The company emphasized its focus on resilience and managing the business tightly, controlling costs, and building resilience for an eventual market upturn.
