Yahoo Finance Embattled Bovis Homes to report flat profits as outlier to booming house building sector
Embattled house builder Bovis Homes will report flat profits after a series of stumbling blocks in the last two months.
Just days after Bovis issued an unexpected profit warning in late December, its chief executive, David Ritchie, stepped down. It said that pre-tax profits were likely to be flat on last year’s total of £160m, at between £160m and £170m, and below analysts’ previous predictions of £183m.
Bovis said this was due to a slowdown in the rate of building and sales in December which will leave the company 180 homes short of its forecast completions.
Analysts at Deutsche Bank said: “In hindsight, widespread press reports suggest even this result was a struggle. From here we believe Bovis will need to reassure confidently on future guidance.”
As a result, Bovis’ largest backer, Schroders, wrote to London-based house builder Berkeley proposing an all-share merger. Berkeley sources said the company had dismissed the call, although other house builders could still be in the frame.
Its problems continued last month, the company also faced accusations it was pressuring buyers to move into unfinished homes with cash incentives, just before it issued its profit warning. Scores of frustrated buyers joined a ‘Bovis Homes Victims Group’ on Facebook.
A spokesman for Bovis said: “We recognise that in some of these cases we have not provided our best standard of customer service and have taken too long to rectify customer issues, for which we apologise.”
Its lack of growth makes it an outlier among house builders which, despite their lower share prices, have reported strong results and high demand. Jon Bell of Barclays described Bovis as “the sector laggard”, with the lowest return on average capital employed among listed house builders.
He said last year that “the company’s recent profits warning represented the latest disappointment for a stock market well-accustomed to its underperformance.”
The example of Bovis contrasts to Barratt Developments and Galliford Try, which are both expected to report strong interim results this week. Barratt has said that completions are at their highest level for nine years, except for in London where they rae down by more than 50pc.
