Bovis Homes issues profit warning as planning delays and rising costs hit

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Planning delays and rising build costs have forced Bovis Homes into a “cold shower” of a profit warning, sending shares spinning 10% lower as it slashed guidance for the year.

The company blamed hold-ups on a “number of new high-profit-margin sites”, meaning this year’s results will be more geared towards current, less profitable sites than it previously thought. 

That along with rising cost inflation leaves profit margins only “marginally ahead” of last year’s 17%. 

Bovis is still on course for record home sales this year, but City analysts said the downgrade could wipe £10 million off 2015 pre-tax profits. 

The bolt from the blue after a series of upbeat results shocked the Square Mile, which marked down the shares 99p to 890p, or 10%.

“Against a tide of positive results in the sector, the Bovis trading update feels like a cold shower,” Deutsche Bank’s Glynis Johnson said.

Chief executive David Ritchie, who refused to speak to the press, claimed the company was “taking another step forward with its growth strategy” and said sales reservations for next year were 18% ahead of this time last year.

There were no signs of any planning delays at privately owned rival housebuilder Countryside, which almost doubled operating profits to £91.2 million in the year to September, while gaining planning permission on around 3500 new plots. 

Countryside boss Ian Sutcliffe said: “We have actually had a great year for planning.”

Countryside, owned by Oaktree Capital, recently appointed Rothschild to advise on two approaches for the business which came to nothing. 

But a host of City firms — JPMorgan, Barclays, Numis and Peel Hunt — are on board for a potential £1 billion float early next year.

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November 19, 2015 |
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