United Kingdom builder Bovis posts profit fall, to build fewer homes
- Author: Zachary Reyes Feb 21, 2017,
Feb 21, 2017, 14:31
Bovis admitted customer service standards "fell significantly" in the year after being dogged by complaints over homes that were sold unfinished and had electrical and plumbing faults.
Peel Hunt reissued a "hold" rating and issued a GBX 820 ($10.22) price objective (down previously from GBX 920 ($11.46)) on shares of Bovis Homes Group plc in a report on Monday.
Interim CEO Earl Sibley said that some properties not finished past year had yet to be handed over to buyers, leading to delays for customers and potential costs for the firm.
The New Ash Green-based firm said shifting the sales to the new year would reduce pre-tax profits for 2016 to between £160 million to £170 million compared to analysts predictions of £183 million.
Bovis Homes' shares have taken a fresh pummelling today, after the British housebuilding company released annual results that showed lower-than-expected earnings for a year ago.
Today Bovis's interim chief executive, Earl Sibley, who stood in after David Richie stood down last month, apologised to customers and launched a plan to improve the company's battered reputation.
"Our customer service proposition has failed to ensure that all of our customers receive the expected high standard of care".
Bovis's shares tumbled on the back of the results, closing down 10.2 per cent at 755p.
Bovis built almost 4,000 homes previous year but said it expected volumes to fall between 10 and 15 percent in 2017.
The company revealed it made profit of £155m for the 2016 calendar year, which is £5m below even the bottom end of a forecast range of £160m to £170m set out in a shock profit warning in December, the Financial Times says.
The average selling price is expected to increase again, reflecting the mix coming through the company's landbank and Bovis said it continues to see market inflation impacting both the cost of subcontract labour and material supplies.
Mr Sibley said the housebuilder would put in place a two-stage "end-to-end" review of its production process.
However, it said it would slow its rate of house building "to support our priority focus on customer service" having come under fire from customers for missing deadlines and paying some to move into incomplete homes.
Boasting a price of 747.75GBX, Bovis Homes Group PLC (LON:BVS) traded 0.33% higher on the day.