Homebuilder Bovis Warns, Demands Rate Cuts
British housebuilder Bovis Homes reported a 6 percent fall in 2007 profit on Monday and warned that 2008 volumes would be significantly lower if current market conditions continue.
"For the full year as a whole, unless decisive action is taken now to reduce interest rates and more normal conditions return to the mortgage market, it is likely that volumes will be well below those achieved in 2007," it said in a statement.
It said sales reservations to March 7 had dropped 20 percent to 1,262 units and its performance through the spring selling period remained critical in establishing the likely volume outcome for the current year.
Bovis said profit before tax fell to 123.6 million pounds ($249 million) in 2007, as total revenue dropped by 6 percent to 555.7 million pounds.
Home completions also declined by 6 percent, to 2,930 units, as economic uncertainties and the higher cost of borrowing hit consumer confidence, Bovis said.
Operating margin was 22.4 percent versus 23.1 percent a year earlier, with administrative expense including sales and marketing costs remaining unchanged at 8.7 percent of sales.
After a decade-long housing market boom driven by low interest rates and high employment, Britain's homebuilders are now set to build fewer homes in the face of tighter mortgage lending and increasing prospects of a house price fall and transaction volumes.
Bovis raised total dividend by 17 percent to 35.0 pence per share.
Shares closed 12.4 percent lower at 520.9 pence.