Tuesday 9 July 2019 9:52 am

Bovis expects half-year rise in profits despite Brexit uncertainty

Bovis Homes looked to shrug off troubles in the property sector today after forecasting that it will report a significant improvement in profit for the first six months of 2019.

The housebuilding giant said it delivered a total of 1,647 house completions in the six months to the end of June, rising from 1,580 during the same period in the previous year.

Boss Greg Fitzgerald, an industry veteran who took charge of the business two years ago as it battled major criticisms over the quality of its homes, hailed today’s results as “an excellent first half performance”.

Shares in the company have tumbled eight per cent in the last 12 months, edging down slightly less than one per cent in early morning trading today, as it released a trading statement ahead of its half-year financial report in September.

Average selling prices nudged up from £334,700 to £342,000 year-on-year, but the developer warned that overall underlying pricing remained “broadly flat”.

“Greg Fitzgerald’s turnaround is delivering impressive results. Revenue and reservation rates are improving and the cost base is being tightly controlled, helping to offset niggling build cost inflation. As a result, profits are expected to rise again this year,” according to George Salmon, equity analyst at Hargreaves Lansdown.

Salmon added: “Perhaps the most impressive achievement is the rise in build quality and customer satisfaction. Bovis is on course to hit top marks in the annual HBF surveys, just three short years after getting the unwanted distinction of being the only builder in the 2016/17 report to be awarded 2 out of 5 stars.

“However, the uncertainty around the UK’s impending exit from the EU means it’s not an entirely pretty picture, and probably explains why the shares offer a 10 per cent dividend yield.”

Housebuilding stocks in the UK have been hit by the mounting Brexit uncertainty in the last 12 months, with parts of the property market in London and the South suffering a particular slowdown in activity.

AJ Bell investment director Russ Mould said: “Investors taking a quick glance at the first half trading update from Bovis Homes could be forgiven for thinking the company is operating in some far-flung geography which is enjoying a property boom.”

Mould added: “Yet all the major indicators suggest the UK property market is in turmoil because of Brexit uncertainty. A key reason Bovis has been able to buck this trend is the fact that the company is in turnaround mode.”