UK's Taylor Wimpey lifts 2026 build-cost outlook on high energy prices, shares drop
Taylor Wimpey Faces Rising Costs and Margin Pressure in 2026 Forecast
By Raechel Thankam Job
April 28 (Reuters) - Taylor Wimpey lifted its 2026 build-cost expectations on Tuesday as higher energy prices threatened to deepen margin pressure on the British homebuilder already squeezed by softer pricing and weak demand, sending shares to a near 13-year low.
Updated Build Cost Inflation Expectations
The company now expects build cost inflation to be in the low to mid-single digits in 2026, up from its previous forecast of low single-digit inflation, as cost pressures and surcharges start to come through from its supply chain.
Profit Warnings and Sector Concerns
Taylor Wimpey had warned that profits would decline this year as softer pricing and rising costs linked to the Iran war fueled concerns that a broader sector recovery is stalling.
Order Book and Regional Performance
The company's order book pricing as of April 26 was down 1% year-on-year, with the steepest declines in southern England where affordability is most stretched, while it continues to phase out its Greater London apartments to free up capital.
Share Price Impact
Its shares, which have lost nearly a third of their value over the past year, were down 4.3% at 79.76 pence at 0715 GMT.
Analyst Reactions and Profit Target Scrutiny
Analyst Concerns Over Profitability
ANALYSTS QUESTION PROFIT TARGET
The increased cost pressures and soft pricing have left analysts questioning Taylor Wimpey's adjusted operating profit target of about 400 million pounds ($540.32 million) for 2026.
Industry Analyst Commentary
"If these conditions persist, prior guidance will come under increased scrutiny," Quilter analyst Oli Creasey noted.
Sector-Wide Land Strategy Adjustments
Taylor Wimpey, like its rivals, has resorted to tightening land targets as pressures mount, with Berkeley warning of slower profit growth through 2030 and halting land purchases, while Barratt Redrow slashed its land approval target.
Company Response and Strategic Focus
The company said it would focus on "driving sales performance, tightly controlling land and WIP spend and mitigating cost where possible."
Land Approval Figures
It approved about 1,000 plots in the year to date, against about 1,700 a year earlier.
Additional Information
($1 = 0.7403 pounds)
(Reporting by Raechel Thankam Job in Bengaluru; Editing by Subhranshu Sahu, Sherry Jacob-Phillips and Bernadette Baum)
