Shares in Bovis Homes slumped around eight per cent this morning after the house builder counted the cost of customer service problems.
Shares were down 7.86 per cent to 774.89p at the time of writing, after opening around 10 per cent lower, following the housebuilder saying this will be the year "when we reset the business" after a "difficult" 12 months.
Pre-tax profit fell three per cent last year to £154.7m, after saying at the end of December it expected to miss market forecasts and deliver profit of somewhere between £160-£170m.
The firm is setting aside £7m to deal with problems with its customer service.
Bovis built nearly 4,000 homes last year, but expects volumes to fall between 10 and 15 per cent this year, before clawing back to "normal industry production".
It did though say its financial position had strengthened with year-end net cash rising to £38.6m.
Why it's interesting
The results come a month after Bovis boss David Ritchie left the company after eight years as the firm warned it wouldn't meet market expectations. And today the housebuilder said full-year pre-tax profit was down and it will build fewer homes this year.
It also marks a turbulent time after Bovis' biggest shareholders suggested a takeover by rival Berkeley Group last month.
And the news that the housebuilder took a £7m hit for customer service problems comes after a raft of complaints over homes that were sold unfinished.
It comes as figures from Rightmove say house asking prices are rising at the slowest rate for nearly four years, with annual price growth falling from 3.2 per cent in January to 2.3 per cent.
Read more: Bovis Homes' chief exec is stepping down
What the company said
Earl Sibley, interim chief executive of Bovis Homes Group, said:
We have a clear set of operational priorities for 2017 and are fully committed to improving our levels of customer service and delivering high quality homes this year and in the future.
The fundamentals of the business remain strong with a robust financial position and high quality land bank.
With our focus on higher levels of customer service, improved build efficiency, and a refreshed culture, we are confident we will generate enhanced shareholder returns over the medium term.
Chairman Ian Tyler said the process of transformation is already underway under Sibley's interim leadership and he was confident the plans "will address the operational weaknesses" seen in the business.
What the analysts said
George Salmon, equity analyst at Hargreaves Lansdown said: "2016 has seen quite a number of dissatisfied buyers, serving as tangible examples of the group’s recent failings. The previous CEO has left, so the measures to resolve the problems are coming from an interim leadership team. The sooner the group can find the right person to take the reins permanently, the better.
"While Bovis has its own issues to deal with, a chunky 10 per cent increase in average prices and continued strong demand from buyers show the sector as a whole is proving resilient despite fears over the effect of the UK’s withdrawal from the EU, though it is still of course early days in this process."