Housebuilder Taylor Wimpey gave a bullish outlook on Tuesday with a 'new and enhanced set of financial targets' as the housing market goes from strength to strength.
The company, which said it was confident enough to set what it admitted were "challenging" medium-term targets, also confirmed that it will return at least £200m of cash per year from 2016 on top of the £50m special dividend in
July 2014 and £200m in July 2015.
"The UK housing market continues to perform strongly with sales rates and pricing at the upper end of our expectations," the group said at an analyst and investor day in London.
Taylor Wimpey also reassured investors the recent introduction of new regulations following the Mortgage Market Review will not adversely impact the business and consumer confidence remains high.
The new regulations, which require detailed checks on borrowers and imposes additional responsibilities for lenders, "is a positive move for the long-term health of the market", it said.
The company also said it is confident in meeting or exceeding each of its financial targets set in 2011 by the end of 2015.
This year, it now expects to deliver an operating margin increase of at least 300 basis points and a return on net operating assets of at least 20%.
Looking further out, the group now expects operating margins to average 20% between 2015 and 2017 and predicts a return on net operating assets of at least 20% per annum. It also is targeting an average increase in net assets (including returns to shareholders) of 15% per annum over the three-year period. These three targets represented an upgrade from its current forecasts for 2015.
Taylor Wimpey has also added a further financial target for converting at least 65% of operating profit into cash.
"In addition to these targets, we will continue to invest in the business to ensure a growing and sustainable future for 2018 and beyond," the company said.
Deutsche Bank said the confirmation of the cash return was significant.
"This the company thought was implicit at the year end 13 statement but have since realised that the market wants to see it written in black and white," it said, estimating that cash returns could reach "£240m-£300m per annum".
Jefferies stressed that the announcement signified no change in strategy.
"We are keen to point out that this updated guidance on performance does not imply a change in strategy, the value strategy remains unchanged," it wrote. "Rather the updated guidance demonstrates that the value strategy is working and that when coupled with the current housing market it is likely to deliver returns ahead of those originally guided to, which assumed no recovery in the low volume UK housing market."
The stock was up 7.4% at 114.13p by 11:19.