Record profits for Bovis Homes

Record profits for Bovis Homes

Housebuilder Bovis Homes has recorded record profits as housing demand for new homes continues to outstrip supply.

Kent-based Bovis said annual pre-tax profits leapt 20% to a record £160.1m to the end of December 2015, as the number of homes completed for the full year rose 8% to 3,934.

Revenues also climbed 17% to £946.5m over the same period, with forward sales growing 14% to 2,003.

The FTSE 250 company said it rode high on the rise in the average sales price, which grew 7% to £231,600, as the demand for houses continued to outstrip supply.

But it warned the lack of skilled workers within the construction industry would drive up costs as activity levels increased.

Shares were up 1% in early trading.

Chief executive David Ritchie said, based on the current housing market, the business will deliver "sustainable growth" in the coming years and achieve "annual volumes of between 5,000 and 6,000 new homes."

He added: "Activity levels continue to increase across the sector and in the near term the availability of skilled labour remains a constraint.

"This labour shortage has driven higher than expected levels of construction cost inflation."

The company said that the average cost for a consented plot of land had also risen over the period from £46,600 to £49,200.

The trading update comes as a report at the beginning of February showed Britain's construction output slipped in the final three months of last year, despite an upsurge in activity in December.

The Office for National Statistics said earlier in the month that building output shrunk 0.4% in the fourth quarter compared to three months before, failing to meet expectations of a 0.1% drop.

Shore Capital analyst Robin Hardy said while Bovis' performance was in line with expectations, there were still concerns about costs.

He added: "We have slightly greater concerns for Bovis than for the wider sector: we have seen two moderate warnings already in the last year or so on cost and still the group highlights that this is a problem with overall build costs up by 8% last year against figures of 5% or less reported by the competition."