Bovis Homes Group Plc (BVS), the U.K.’s second-smallest homebuilder by market value, said it sold more homes at higher prices last year after customers purchased a greater proportion of single-family houses than apartments.
Bovis forecast higher sales volumes, rising prices and a “significant” profit increase for this year on widening margins, the Longfield, England-based company said in a statement today.
“There’s a substantial increase in profits to be announced,” Chief Executive Officer David Ritchie said in an interview. “We’re paying less for our land and we’re also paying less to our sub-contractors to build the houses.”
Homebuilders are boosting profit margins by focusing more on houses and building on land bought at a discount following the credit crisis. The U.K. government is trying to bolster homebuilding with investment and mortgage guarantees. From the second quarter, those seeking a new home may be able to get a mortgage with a down payment of as little as 5 percent.
Bovis sold 2,045 homes for the 12 months to Dec. 31, compared with 1,901, a year earlier. The average selling price rose 1 percent to 162,400 pounds ($248,400) after building fewer apartments in favor of single family homes.
Operating margin is forecast to be around 10 percent compared with 7.3 percent an earlier year. Net private reservations grew 24 percent to 1,653 and the company had forward sales for this year of 568 homes, an increase of 35 percent.
Bovis rose as much as 2.4 percent in London trading and was little changed at 455 pence as of 10:44 a.m. The stock has advanced 4 percent in the last 12 months, making it the second worst performer among the U.K.’s seven biggest publicly traded homebuilders.
To contact the reporter on this story: Chris Spillane in London at email@example.com