Bovis reported having a difficult year in 2017. A weakness in its production process and a high level of customer service issues led to a one-off £7m customer care provision.
The housebuilder said that in 2017 it will focus on re-setting the business, which will result in a deliberate slowing of its rate of production.
Profit before tax took a 3% dip in 2016, falling to £154.7 million from £160.1 million in 2015. Revenue was up 11% to £1,054.8 million from £946.5 million in 2017.
Bovis will be targeting completion volumes for 2017 to be c. 10% to 15% below the 2016 level, before a return to normal industry production levels. The housebuilder expects the average selling price to increase, and for market inflation to impact both the cost of subcontract labour and material supplies. Bovis will also increase its level of investment in 2017.
Whilst there will inevitably be an impact on Bovis’ earnings and cashflow, the Board said that it intends to recommend maintaining the dividend at the level declared for 2016.
Ian Tyler, Chairman of Bovis Homes Group PLC said, “Despite the difficulties of 2016, the Board remains confident in the Group’s abilities to deliver improved returns to shareholders. The process of transformation is already underway under Earl Sibley’s interim leadership and I am confident the plans in place will address the operational weaknesses we have seen in our business, and focus us once again on delivering high quality product and service to our customers. Further, we are undertaking a strategic and structural review of the business to ensure we meet our commitment to deliver the highest possible returns from our valuable land assets.”
Earl Sibley, Interim Chief Executive of Bovis Homes Group, added, “We have a clear set of operational priorities for 2017 and are fully committed to improving our levels of customer service and delivering high quality homes this year and in the future. The fundamentals of the business remain strong with a robust financial position and high quality land bank. With our focus on higher levels of customer service, improved build efficiency, and a refreshed culture, we are confident we will generate enhanced shareholder returns over the medium term.”