Shares in Bovis Homes were up more than five per cent this morning after the housebuilder reported a strong first-half performance.
Profit before tax jumped 41 per cent to £60.2m this year, up from £42.7m in the first half of 2017.
The Kent-based company generated revenue of £432.2m between January and the end of June this year, a rise of one per cent on last year's figure.
The company increased its interim dividend to 19p per share, an increase of 27 per cent, as well as a special dividend of £60m.
Why it matters
The results mark a turnaround after former chief executive David Ritchie quit the group at the beginning of last year, two weeks after it issued a profit warning.
Bovis said customer demand for new homes across all regions, low interest rates, good competition in the mortgage lending market and housing policies such as Help to Buy had driven the profit rise.
It is the latest UK housebuilder to report increased profits in the first half of this year.
Barratt Developments, the largest housebuilder in the country, announced record pre-tax profits of £836.5m on Wednesday, and Redrow posted a 21 per cent increase to £380m earlier this week.
What Bovis said:
Chief executive Greg Fitzgerald said: "We delivered a strong performance in the half with a more than 40 per cent increase in profits.
"This reflects the excellent progress made across all business areas over the past 18 months and a step change in the quality of the homes we are building and level of service we are providing our customers.
"We are confident in the outlook for the business and are targeting a record year of profits in 2018, at the top end of the board's expectations."
What analysts said:
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “You’ve got to hand it to Greg Fitzgerald, he hasn’t half done a good job at Bovis.
"A focus on margins has seen profits leap this year, and he intends to deliver a similar margin boost before the end of 2020.
"That’s particularly impressive given the problems with build cost inflation that have plagued Bovis in the past. Streamlining the group’s land bank should also boost returns on capital.
"The pace of progress means full year profits are now expected to be at the top of management’s expectations – not bad less than two years after a major profit warning caused the previous CEO to walk, and left Bovis fending off opportunistic takeover bids from rivals.
"Of course, conditions in the wider housing market aren’t all rosy, with rising interest rates, flagging real wages and Brexit uncertainty all potential headwinds. Probably the biggest threat on the horizon is the potential end of Help to Buy.
"The scheme supports 36 per cent of Bovis’ reservations, and the withdrawal of government largesse would undoubtedly hit sales. It’s due to run until 2021, but its future beyond then is worth watching out for in the autumn budget.”