Galliford Try commits to building more homes

 
Helen Cahill
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House price growth has been slowing since April last year (Source: Getty)

Galliford Try's share price edged upwards this morning after the housebuilder's profit jumped, and it said it had a confident outlook on the year ahead.

The figures

For the six months to the end of 2016, group revenue grew four per cent, up from £1.18bn to £1.24bn.

Galliford's profit jumped 19 per cent, from £52.9m to £63.0m, and its interim dividend was up by 23 per cent to 32p, which the housebuilder said reflected "confidence in the full year outlook".

The group's share price was up 0.26 per cent at time of writing.

Why it's interesting

House price growth has slowed to its slowest rate for four years, but Galliford was confident about house prices today, saying they were "robust".

The group's update this morning was in sharp contrast to Bovis Homes' yesterday. While Bovis has said it will be cutting production due to problems delivering quality homes, Galliford said today that it would be pumping up volumes by 60 per cent over the next five years, and aims to build 5,000 homes every year.

Read more: Bovis Homes shares tumble after profits slump

Meanwhile, Bovis' chief executive Earl Sibley has been sitting on sofas with disappointed customers who have been complaining about extraordinary snagging issues with their homes. Customers have been forced to move into properties with holes in the walls, and windows in the wrong places. Bovis said cutting its production volumes will weigh on earnings this year.

What Galliford Try said

Peter Truscott, chief executive of Galliford, said: "We continue to see robust demand and pricing in residential markets...and the land market remains benign in all regions.

"Whilst we remain alert to potential uncertainties in the wider economy, we continue to see opportunity in all of our markets. We enter the new calendar year with strong order books."

What analysts said

Anthony Codling, equity analyst at Jeffferies, said that Galliford's aim to double operating margin and increase cash-generation in its construction arm was "in-tune with the wishes of the UK government", as it looks to increase housing supply across different types of tenure.

"Galliford has a good track record of delivering growth," Codling said. "In our view the updated strategy is good for the UK house buying public and good for investors in Galliford's shares."

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