January 12, 2018 / 7:15 AM / 9 days ago

UK builder Bovis says on track for significant profit growth in 2018 ​

LONDON (Reuters) - British builder Bovis said on Friday it was on track to deliver a significant increase in profitability in 2018 as it seeks to turn its business around after seeing off two takeover bids last year following a profit warning.

Some buyers have also complained about the quality of its homes, citing problems ranging from a lack of sealant in bathrooms to the heads of nails poking through walls, issues that have been highlighted in media reports.

The group said its pre-tax profit would fall around 25 percent to roughly 115 million pounds after one-off charges linked to restructuring, extra work it is undertaking to improve its homes and merger talks.

The number of homes it built in 2017 fell by 8 percent to 3,645 units as it focuses on improving quality.

Chief Executive Greg Fitzgerald, appointed only last April, told Reuters 2018 full-year profit should meet consensus expectations of around 155 million pounds.

“Our forward order position is strong, and with robust industry fundamentals, we expect the Group to deliver a significant improvement in profitability in 2018,” he said.

FILE PHOTO: A builder works at a Bovis homes housing development near Bolton, Britain, July 9, 2008. REUTERS/Phil Noble/File Photo

Bovis shares traded 3 percent higher at 0820 GMT.

Barratt, Britain’s biggest housebuilder, on Thursday reported a flat sales rate in the last six months of 2017, adding that prices rose and it expects to build even more homes this year.

Bovis has also initiated a number of changes to address shortcomings in quality.

“There’s no one single golden bullet: One, we’ve improved most importantly, and have still got some work to do, the quality of our site managers,” Fitzgerald said.

“We’ve also got five new production directors...we’ve got a number of new contract managers and that in itself brings in a number of new sub-contractors that we can bring in within our supply chain.”

Bovis, whose previous chief executive quit last year prompting rivals Galliford Try and Redrow to make unsuccessful takeover bids, announced a plan in September to rein in growth plans, reduce its land bank and cut staff.

Reporting by Costas Pitas; editing by Kate Holton/Keith Weir

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