Shares in housebuilder Bovis climbed a little after its third quarter results showed a small improvement in sales and it said profits will see a ‘significant’ improvement next year.
Bovis, which last year was rocked by a profit warning and left reeling from complaints from furious customers over shoddy workmanship, said the average sales rate over the period was 0.52 between July 1 and November 10, marginally up from 0.48 during its first half.
Boss Greg Fitzgerald, who joined in April to turn around the company, said full-year profits were in line with expectations this year and were set for a big improvement the next.
Upbeat: Bovis Homes said its full-year profits were on track and sales had improved
‘Trading is in line with expectations, the market remains strong, and we are on track to deliver another disciplined period end,’ he said.
Shares in the group rose 1.2 per cent to 1,118p. The update comes after fellow builder Taylor Wimpey said this week that sales rates had increased but its order books had dipped slightly.
Bovis has continued to be propped up by the Government’s Help to Buy scheme and low mortgage rates like other housebuilders, although its performance has lagged a bit behind rivals.
The company said it expects to increase its prices this year, partly thanks to ‘modest’ price growth across the housing market.
In its update, Bovis said it was also reaping rewards from a company-wide efficiency programme, and was aiming to return about £180million to shareholders over the next three years.
Customer satisfaction score improved significantly, the group said, to 75 per cent.
It comes as earlier this year it emerged that Bovis had offered housebuyers thousands of pounds to persuade them to move into unfinished homes in a desperate bid to hit sales targets last Christmas.
But outraged buyers complained about everything from wrong kitchen units being installed to unfinished driveways.
It was not the first time Bovis had angered its customers, with many in the past having complained about leaking pipes, holes in walls and dodgy wiring.
Nicholas Hyett, equity analyst at Hargreaves Lansdown said Bovis performance was heading in the right direction.
‘Pricing and sales both improved in the third quarter, with initiatives such as a new product line up yet to kick in. Given that CEO Greg Fitzgerald joined the group just seven months ago, that’s pretty impressive in itself.
‘Even more progress has been achieved in strengthening the balance sheet. The group expects to finish the year with almost three times as much net cash as in 2016, and has already started to shrink the land bank with more disposals likely.
‘Bovis has got a long way to go before it can be said to be in rude health, with customers satisfaction still leaving something to be desired despite improvements. But these numbers suggest the foundations for recovery are being laid.’
Neil Wilson, senior analyst at ETX Capital, said: ‘Just as Taylor Wimpey reported yesterday, demand for new homes is strong, supported by very strong fundamentals – low mortgage rates, Help to Buy, low unemployment and lack of supply.
‘Eyes remain on the Budget next week for any further assistance for first time buyers on Stamp Duty and Help to Buy extensions.’