Author Topic: Bovis Homes Issue Profit Warning  (Read 8032 times)

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Bovis Homes Issue Profit Warning
« on: December 29, 2016, 08:06:40 am »
Despite the most favourable conditions for profiting from building new homes ever, Bovis Homes issued a profit warning yesterday ahead of reporting its final results for the year ending 31 December 2016 on 20 February 2017.

Bovis said they now expect to complete between 3,950 and 4,000 homes, the exact number depending on the extent of legal completions in the remaining 3 days of the year. Bovis blame operational issues stating
"we have experienced slower-than-expected build production across the group’s sites during December, resulting in approximately 180 largely built and sold private homes that were expected to complete in 2016 being deferred into early 2017"

A spokesman said there had been delays in getting the final sign-off for 180 houses before the end of the year, so people had not moved in yet – a logistical issue rather than a fundamental problem.
In other words, 180 new homes that Bovis had told buyers would be ready for them to move into before the end of the year, are so far behind they have been pushed back to February or beyond. They were in such as state that the warranty providers refused to sign them off under CML as being "complete" and fully compliant with building regulations.

The question that needs asking is:
Have the NHBC decided, after many years of 'signing off' less than 100% complete new homes to help housebuilders achieve their end-of-year figures, not to do so; having discovered that it resulted in increasing numbers of warranty claims, especially for housebuilders with a poor record of attending to and rectifying defects after legally completion?

Last year Bovis completed 3,934 new homes. For the year to 31 December 2016 it now expects between 3,950 and 4,000 completions, rather than the 4,170 forecast by the City or the firm's own 4,100-4,200 target. The company said the "production delays" mean that instead of 5% growth in house completions this year, there will be growth of 0% to 2%.

As expected, Bovis said:
"The Group has achieved Land sales in 2016 generating revenue of circa £26 million and profit of circa £7 million (2015: revenue of £30 million and profit of £7.8 million).
Given the above, the profit before tax for the year ending 31 December 2016 is expected to be within a range of £160 million to £170 million (2015: £160.1 million)."

So much for building more badly needed new homes, Bovis appear to be struggling to maintain even their previous year's output!  Bovis have obviously been aware of production problems for most of this year and have been unable to do anything to improve their performance. In October, CEO David Ritchie announced  a purge on poor performing contractors.
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