Bovis Homes profit doubles as construction costs squeezed

Pre-tax profit at housebuilder Bovis Homes doubled in the first six months of the financial year on the back of reduced construction costs, according to interim results published today.

Pre-tax profit at the firm was up by 130% to £8.1m for the six months to 30 June, on the back of revenue up by 16% to £133.6m.

The results come from the completion of 801 homes, almost identical to the 803 in the same period last year.

The firm said sales were strong, with a 19% increase in private sales on the same point in 2010, with 1,087 sold. Bovis expects to have an average of 78 outlets open in the second half of 2011, compared with 68 the same time last year.

Analyst Panmure Gordon upgraded its rating of the firm from a hold to a buy on the announcement.

David Ritchie, chief executive of Bovis, said: “The increase [in performance] has been delivered through improved profit margins from reduced construction costs and the initial contribution from higher margin sites acquired since the housing market downturn.”

“As a result of opening a significant number of the new, more profitable sites, active sales outlets will grow through 2011, supporting higher sales.

“Subject to current market conditions continuing, the group’s profit margins will continue to improve, particularly in 2012 when a significant proportion of housing completions will come from these new sites.”

The firm spent £46m on land in the first half of the year, adding 1,571 consented plots to its land bank in the first six months. Land for an additional 450 homes has been added to that since the year end.