Bovis Profits Surge On Record Home Sales

Bovis has posted record profits after home sales rose to an all-time high last year, but warned that a lack of skilled workers in the construction industry would drive up costs.

The Kent-based company said annual pre-tax profits increased by 20% to £160m to the end of December 2015, with revenues also climbing, up 17% to £946m over the same period.

The housebuilder said it benefited from the rise in average sales prices, which last year grew by 7% to £231,600, and that the average cost for a plot of land had also increased from £46,600 to £49,200.

Chief executive David Ritchie said the business will deliver "sustainable growth" based on the current housing market and forecasts "annual volumes of between 5,000 to 6,000 new homes" in the coming years.

But shares failed to rise after Mr Ritchie warned that while it was seeing a continuing surge in house building, it was struggling to recruit enough workers to fulfil the demand.

He said: "Activity levels continue to increase across the sector and in the near term the availability of skilled labour remains a constraint. This labour shortage has driven higher than expected levels of construction cost inflation."

Shore Capital Analyst Robin Hardy said while Bovis' performance was in line with expectation, costs remain a concern after two moderate warnings over the last year, "with build costs up by 8% last year against figures of 5% or less reported by the competition".