LONDON (Alliance News) - Bovis Homes Group PLC Thursday became the latest UK housebuilder to report further growth in profitability, as it built and sold more houses at a higher average price, while real estate advisor Savills PLC said it expects its 2014 underlying results to be well ahead of its previous expectations after a very strong December.
Bovis echoed peers in saying it expects to sell even more houses in 2015, although the rate of growth will stabilise after the exceptional recovery seen in 2014. It expects "2015 will be another successful year of growth in revenue and profit giving rise to further improvement in returns".
Bovis said it legally completed in 3,635 properties in 2014, up from 2,813 in 2013, while the average selling price it achieved rose to GBP216,600, from GBP195,100. That helped lift the company's operating profit margin to about 17%, from 14.9%. Return on capital employed rose to about 16%, from 10.4% in 2013.
The company expects to report its full 2014 results on February 23.
It said it held its strongest forward sales position for many years at the start of 2015, with 1,752 reservations for 2015 delivery, 27% ahead of the 1,377 reservations at the start of 2014. It has started the year with 103 active sales outlets.
"Assuming that the housing market conditions in 2015 will be similar to 2014, the combined effect of the strong forward order book and the expected growth in active sales outlets will enable the Group to increase volume, albeit at a slower pace than in 2014," it said.
Savills, meanwhile, had given a trading update in November that said underlying results for 2014 would at least meet its expectations. On Thursday, the company said December had been much stronger than it had foreseen, and it therefore now expects its results to be "well ahead" of its previous expectations.
It said it had seen strong performances across its transactional businesses in December, resulting in revenue and profits significantly exceeding its previous forecasts for the month. It said the strength was driven by the the completion of a number of sizeable transactions in UK and European commercial markets, the rise in Stamp Duty announced by the UK government on residential transactions, which provided a short-term boost to volumes, and the successful close of a new Nordic Logistics Fund earlier than anticipated in its investment management business.
However, it said it is remaining cautious about 2015, particularly on the performance of the UK residential market in the first half of the year due to continued uncertainty around the UK General Election, and the timing of a sustainable recovery in Hong Kong.
It expects to report its full 2014 results on March 19.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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Savills (SVS)