Bovis Sales Climb on Demand for Large Homes in South England
Sales rose to 2,813 homes and the average price gained 14 percent to 195,100 pounds ($319,000), the Longfield, England-based company said today in a statement. The company’s operating profit margin is approaching 15 percent, according to the statement.
Prime Minister David Cameron is using homebuilding to help stimulate the economy, with the government in March announcing that it would offer an equity loan of as much as 20 percent of the value of a newly built home valued at 600,000 pounds or less. A U.K. house-price index by the Royal Institution of Chartered Surveyors was close to the highest in more than a decade last month, led by London and the Southeast.
The company’s strategy has been to “invest in a lot of land in the south of England, moving the business back to its heartland of traditional detached housing in the south, and as a consequence the average price point has increased,” Chief Executive David Ritchie said by phone. “That’s going to continue because we’ve continued to invest in that way.”
U.K. homebuilders have widened profit margins by obtaining development land after prices dropped during the financial crisis. Companies including Bovis have also increased margins by shifting their focus to single-family homes from apartments. Bovis bought 3,737 plots of land in 2013 and now has enough land for five years of construction at current levels, the company said.
Bovis is likely to announce a “significant increase” in pretax profit for 2013 when it releases full-year earnings on Feb. 24, it said. The company’s operating profit margin widened to 15 percent from 13.3 percent a year ago.
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