Bovis shares slide on warning of December slowdown
Housebuilder says 2016 completions will be lower than expected
Shares in Bovis Homes fell 5 per cent in early trading on Wednesday after the UK housebuilder warned that a slowdown in home completions in December would dent full-year profits.
The FTSE 250 company said in a trading statement ahead of its year end that the number of homes built by the end of the month would be “lower than previously anticipated”, resulting in the deferral of about 180 sales into next year.
It said profits before tax for the year to December 31 would be lower than forecast at between £160m and £170m. This compares with profits of £160.1m in 2015.
Analysts were expecting profits of £183m, according to Thomson Reuters.
Bovis said it expected revenues for 2016 to be between £1.04bn and £1.06bn. Land sales were also forecast to fall compared with 2016, both in revenues and profits.
Bovis shares were down 4.6 per cent at 816p in morning trade in London, having closed at 855p on Friday.
The update from Bovis weighed on the share prices of industry peers with Crest Nicholson, Berkeley Group and John Laing all falling.
Bovis said in the statement: “We expect the volume delivery for 2016 will be lower than previously anticipated at between 3,950 and 4,000 homes, the exact number depending on the extent of legal completions in the remaining days of the year.”
It added that “slower than expected build production” during December meant sales of about 180 homes expected to complete this year would be “deferred into early 2017”.
Bovis said, however, that the level of building starts was 7 per cent higher than 2015 at more than 4,200 units. It had secured detailed planning for all homes expected to be completed in 2017, which was “an improved position on the start of 2016”.
The news from Bovis surprised markets after the company said in November that it expected to deliver record revenues in 2016.
Until now, housebuilders have been reporting healthy profits and increasing sales against a backdrop of rising house prices, with little sign yet of any significant fallout from the Brexit vote.
However, a number of companies that supply building materials had struck a downbeat tone. Some have been closing branches and cutting jobs.