Bovis Homes' volume delivery to be lower than anticpated

28th Dec 2016 07:07

(ShareCast News) - FTSE 250 housebuilder Bovis Homes warned that volume delivery for the year is expected to be lower than anticipated and that there will be a "modest" reduction in the operating margin.Volume delivery for the year ended 31 December is expected to be between 3,950 and 4,000 homes, depending on the number of legal completions in the remaining days of the year due to slower than expected production across its sites during December.This resulted in the completion of about 180 large private homes being pushed into early 2017.The company said that the operating margin is expected to "reduce modestly", but the "improved capital turn will assist in supporting return on capital employed in 2016".Bovis Homes made £26m worth of land sales this year, which was lower than £30m last year, while profit fell slightly to £7m from £7.8m.Revenue is expected to be between £1.04bn and £1.06bn and will deliver an "improvement in capital turn" from 1.05 times last year, while pre-tax profit is anticipated to between £160m and £170m.The company said it had been selling from a lower number of sales outlets during the year as site closures exceeded new site openings. Its weekly sales rate per site is "slightly ahead of last years rate of 0.56 with around 900 sales expected in the first half of 2017.Bovis Homes built over 4,200 units during 2016, an increase of about 7%, which will "provide a greater expected work in progress position for the start of 2017", with a greater number of homes in production than at the start of 2016 and more evenly distributed across active sites.The average price of homes legally completed this year is anticipated to increase about 10% from £231,600 last year, due to "improved mix and increased underlying market pricing".It said that it has remained "disciplined" in land investing by buying high quality consented land in prime locations outside of London, with 30 sites and 4,000 plots.The average return on capital employed of the land added in 2016 is about 30%, with a gross margin of over 27%.Three acquisitions are strategic sites where the returns are expected to be superior to current investment rates and they are expected to be added to the land bank in early 2017.The company also remains confident of delivering a full year dividend.Shares in Bovis Homes were down 3.5% to 826p at 0830 GMT.