September 7, 2017 / 6:31 AM / 9 months ago

UK builder Bovis reins in growth targets as part of turnaround

LONDON (Reuters) - British housebuilder Bovis (BVS.L), the subject of two failed takeover bids this year, said it would rein in growth plans under a new boss after reporting a 31 percent fall in first-half profit on Thursday.

Greg Fitzgerald, CEO of Bovis, poses for a portrait during an interview with Reuters at offices in London, September 7, 2017. REUTERS/Toby Melville

Chief Executive Greg Fitzgerald took over in April aiming to turn around a business hurt by critical media coverage in Britain prompted by complaints about the quality of its homes.

First-half pre-tax profit fell 31 percent to 42.7 million pounds as completions declined 6 percent to 1,512 units, in line with previously stated expectations, as the firm slows its building this year to focus on improving quality.

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While nearly all of Britain’s major housebuilders have posted bumper profits in recent years, Bovis has suffered as buyers complained about issues ranging from a lack of sealant in bathrooms to nails poking through walls.

    On Thursday, the firm said it now aimed to build 4,000 homes per year, significantly lower than a previous target of 5,000-6,000, and that it would focus much more on delivering affordable housing.

    Its shares were up 9 percent in early trading.

    “If we were going to go to 6,000... I would probably need to open about four new offices. Opening four new offices in regions where we are not established and have no links to any supply chain, would be counterproductive,” Fitzgerald told Reuters.

    “It would lose us money, it would lose us definitely margin and it would be more of the same, giving poor properties over to our customers, which is what Bovis experienced far too many times,” he said.

    He told Reuters that full-year volumes would end the year down nearly 10 percent at around 3,600 units, before growing next year and reaching 4,000 homes in 2019.

    The firm has also reviewed the efficiency of some of its operations such as planning, design and engineering and has reduced its overall headcount by 120, with the total restructuring costing around 4 million pounds.

    Editing by James Davey and Jason Neely

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