Housebuilder Bovis eyes profits boost despite £10m costs over complaints and restructure
PUBLISHED: 08:59 12 January 2018 | UPDATED: 14:26 12 January 2018
Bovis Homes has become the latest housebuilder to shrug off economic uncertainty by posting a bullish trading update, pointing to a hefty rise in profit this year.
The company, which has sites in Cringleford and Costessey, Norwich, and Ribbans Park in Ipswich, said strong customer demand, attractive mortgage rates and government initiatives, in particular Help to Buy, are helping drive sales.
The housebuilder has been criticised for the quality of homes at several sites across the country, including in Norwich.
Boss Greg Fitzgerald added that this year’s profit before tax and one-off and exceptional items is in line with forecasts, while next year is set to see a big boost.
“The group had a very disciplined year end and delivered against all of its financial and operational targets for 2017.
“Our forward order position is strong, and with robust industry fundamentals, we expect the group to deliver a significant improvement in profitability in 2018.”
It is the latest housebuilder to post a strong update, following recent figures from Taylor Wimpey, Barratt and Persimmon.
Bovis, which had been dogged by complaints over unfinished homes with electrical and plumbing faults, also said that it has seen a significant improvement in customer satisfaction.
“There has been a step change in the quality of our homes delivered on completion and I’m pleased to see this reflected in our level of customer satisfaction which continues to improve,” Mr Fitzgerald added.
Bovis completed 3,645 homes in 2017, confirming a building slowdown as it focuses on quality.
The average selling price on completion increased 7% to £272,000 with private average selling prices increasing by 9% to £334,000.
Bovis confirmed that operating margins impacted plans to “re-set” the business by driving sales from older lower margin sites, significantly reducing its stock and ploughing ahead with customer service initiatives.
Bovis will book exceptional one-off items totalling £10.3m, consisting of a £3.5m customer care cost, £2.8m advisory fees and a £4m restructuring charge.