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‘NO END TO SLUMP’ WARNS BOVIS BOSS

GLOOM: Bovis saw its housing sales fall from 1,256 to 851

Wednesday August 27,2008

By Andrew Johnson

HOUSEBUILDER Bovis Homes warned the housing market crisis would continue “for the foreseeable future” after seeing its half-year profits demolished by 80 per cent.

As pre-tax profits fell from £58.4million to £11.7million for the six months to June, chief executive David Ritchie (right) called on the Government to revive the mortgage market.

Bovis has cut 400 jobs already.

Yesterday the firm slashed the half-year dividend from 17.50p to 5p, a move freeing up about £18million in cash. Ritchie expected the job losses to save £10million by the end of the year.

The company had planned to pay a 20p dividend this half but Ritchie said this had been dependent on stable business conditions.

“I think we can all agree the environment is not stable at the moment,” he said. “These are the worst market conditions we have seen in our experience as a public company.”

However, Ritchie said, Bovis would stay within bank conditions attached to about £110million in debt, as long as it continued to sell houses at the current level of 50 to 60 a month until the end of the selling season in November.

Bovis did not have to write off huge sums on the value of its land. The shares rose 13.25p to 441.75p.

The company saw legally completed sales fall from 1,256 to 851, while the average selling price of private homes, excluding its social housing, dropped 4 per cent to £196,700.

Ritchie said the main problem was the lack of mortgage finance and urged the Government to take steps to get the market moving again.

“The Government has a lot of bright people working for it, and so do the banks,” Ritchie added. “We hope they are working together to arrive at a solution.”

He added the company would welcome moves for a stamp-duty holiday as well as interest-rate cuts to stimulate demand.

Panmure Gordon analyst Mark Hughes said the figures were weaker than he expected and were “significantly weaker” than those of Persimmon, released last week.

However, Citigroup analysts were more sympathetic, saying the figures were “just more confirmation of the very difficult times faced by the housebuilders”.

Further gloom in the sector is expected from Taylor Wimpey’s results tomorrow.