19th Nov 2015 08:17
LONDON (Alliance News) - Bovis Homes Group PLC shares dropped in early trade on Thursday after the housebuilder warned its operating profit margin for the full year is likely to be only marginally ahead as its overall mix of homes it more weighted to existing sites than previously anticipated.
Shares in Bovis were down 12% to 872.00p early Thursday, one of the worst performers in the FTSE 250.
The group said that following planning delays on a number of higher margin sites, its revenue mix will be weighted further towards existing sites than it had originally planned for. Bovis said delivering an increasing in production in the short-term remains constrained by a shortage of sub-contract labour, which has pushed up its costs, though this is showing signs of moderating.
As a result of this revenue bias and the higher costs, the company expects its operating profit margin for the full year will only slightly improve on the 17.0% it delivered in 2014.
For the autumn period, sales growth remains strong, with its weekly private sales rate 20% higher since the start of September year-on-year. The group has sufficient reservations on its books to deliver on its target of 8.0% growth in volumes for the full year, and its construction activity for 2015 is on track.
"Bovis Homes is taking another step forward with its growth strategy in 2015. We continue to trade well supported by a strong market backdrop and have in place the required pipeline of sales to deliver our planned volume growth for the full year," said Chief Executive David Ritchie.
"The growth in volume and increase in sales prices are expected to deliver strong revenue growth and a capital turn in excess of one. Whilst our operating profit margin is now expected to be only marginally ahead of the prior year, the group remains on track to deliver a further increase in return on capital employed in 2015," Ritchie added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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