U.K. Housebuilder Bovis Cautious on Outlook, Shares Down
British housebuilder Bovis Homes said on Monday its first-half profit met its expectations but struck a cautious note on prospects and reported a slowdown in visitors and reservations. Bovis shares fell 7.9% on the news.
"While the group is in a good position to expand ... the extent of the planned increase in volume for 2007 over that achieved in 2006 will depend on consumer confidence over the key summer and autumn selling period," it said in a statement.
The group said its first-half reservations of 2,282, versus 2,273 a year ago, reflected a recent slowdown in both visitor rates and in reservation rates, echoing cautious tones sounded by some of its rivals in recent weeks.
"The trading update is slightly disappointing suggesting first-half results are broadly flat on last year ... which does not bode well for the 10% growth in pretax profit forecast for both 2007 and 2008," Bridgewell Securities said in a note.
"On the back of the announcement, we anticipate downgrading 2007 and 2008 estimates in the region of 7-10%."
Bovis said its first-half average sales price was in line with the previous half year at around 189,000 pounds ($380,300), with legal completions and operating margins also broadly in line with the previous year's level.
Britain's red-hot housing market, which has been mainly led by buoyant London and southeast England areas, is seen slowing down, as rising interest rates are taking the steam out of the market's double-digit percentage price growth.
Last week Britain raised interest rates for the fifth time in less than year to a six-year high of 5.75% and analysts expect the Bank of England to raise them again to 6.0% before the year end.