Bovis Homes see their profit double

ILW

Cant be bothered to look, but what is the profit as a percentage of capital employed?

It really is the only one that matters.

System

chewmylegoff wrote: »

Don't get too excited.

Profit per build up....from 20.1% to 20.9%

Two land sales achieved a profit of £4 million (same period last year £0). So that's 1/2 of the increase in profit right there.

Otherwise they have sold 1,968 homes compared to 1,607 in the same period last year.

Is that right? That means they only make £2000 per home.

Graham_Devon

Joeskeppi wrote: »

Is that right? That means they only make £2000 per home.

No.

Around 30k per home.

chewmylegoff

Joeskeppi wrote: »

Is that right? That means they only make £2000 per home.

no, it's not right, i read off the 2012 to date stats, which include sales in July and August as well.

correct stats are 944 vs 801 last year for completions in H1 2012.

· Legal completions of 944 homes (H1 2011: 801 homes), an increase of 18% with an average sales price of £164,400 (H1 2011: £163,400)
· Average active sales outlets increased by 21% to 82 in H1 2012 from 68 in H1 2011
· Two land sales achieved in H1 2012, delivering a profit of £3.9 million (H1 2011: Nil)

seems a bit odd that completions YTD are 1,968 vs 944 as that means they have sold more houses in the last 2 months than they did in the first half of the year, but that's what their release says:

· Strong trading in 2012 to date (33 trading weeks) with a 19% increase in private reservations to 1,253 homes (2011: 1,049) at a sales rate of 0.46 net private reservations per site per week
· Sales rates in the last seven weeks at 0.46 net private reservations per site per week, slightly ahead of the comparable prior year period
· Cumulative sales achieved to date for 2012 legal completion of 1,968 homes (2011: 1,607)

the average gross profit on a house is £164,400 x 20.9 = £34,360 but that is the gross profit. profit before tax is about half of gross profit so really making about £17,000 per house, before tax.

CLAPTON

Graham_Devon wrote: »

I agree with everything people have said, hence why I stated "nothing wrong with a business making profits".

My comments come from the fact that others tell us the business can't lower prices as they hardly make any profit as it is on the properties.

The "they can't ower prices" argument crops up whenever there is talk about low amounts of new housing, and the builders blaming the banks for not advancing the amount of money required for FTB's.

They obviously can lower prices.

The point really should be that they don't have to lower profits currently and neither do they wish to (no one would).

The reason they dont have to lower profits (and can actually see profit per property rise) has got to be partly due to the support builders have found themselves gaining from the taxpayer.

Tat's all I'm saying really, so don't want it taken down the same old route of "you don't understand how business works". I do.

All I'm doing here is backing up previous arguments, mainly with Hamish, over builders being unable to lower profits and build more. They can build more (they have the land as shown in their figures) and they can reduce profits (instead they increase). If they needed to and lost government support, they would do to stop the business going under.

of course if you look at profits for 2010 compared to 2009 you will see that their profits increase by infinity percentage .. which clearly shows they could reduce their houe prices to zero.

whether you understand how businesses work I've no idea, however I'm pretty sure you don't understand company accounts.

HAMISH_MCTAVISH

You're all wrong.

Its 12K profit per house built. Before tax.

(excluding revenue from land sales, as no homes were built, so £12.2m / 944 for H1 pre tax profit)

With an average selling price of 164K, that's a 7% profit margin.

Which is exactly what I claimed in my earlier posts on the subject, when I noted that builder were operating with "profit margins in single digits", so they obviously cannot drop the price of houses by tens of percent.

chewmylegoff

Graham_Devon wrote: »

All I'm doing here is backing up previous arguments, mainly with Hamish, over builders being unable to lower profits and build more. They can build more (they have the land as shown in their figures) and they can reduce profits (instead they increase). If they needed to and lost government support, they would do to stop the business going under.

if we look at enough house builders accounts we will be able to find some where their margins are dropping and their sales volumes are down, and then selectively post these to make a point about it.

i think it's difficult to make the points you are making without looking at the performance of the industry as a whole. the stats for new housing starts tell their own story:

http://www.insidehousing.co.uk/development/housing-starts-drop-a-massive-24-per-cent/6523278.article

i don't think it's really possible to challenge the view projected by the declining number of starts using the interim accounts of one market participant.

RUN_RABBIT_RUN

HAMISH_MCTAVISH wrote: »

You're all wrong.

Its 12K profit per house built. Before tax.

(excluding revenue from land sales, as no homes were built, so £12.2m / 944 for H1 pre tax profit)

With an average selling price of 164K, that's a 7% profit margin.

Which is exactly what I claimed in my earlier posts on the subject, when I noted that builder were operating with "profit margins in single digits", so they obviously cannot drop the price of houses by tens of percent.

thing is, even if they were into double-digit profit margin on their houses, it's still not like that leaves them a lot of room to reduce prices.

if we just suggest for a minute that you're wrong and we say that the gross profit per houes is about 30k and the net profit is around 17k as suggested on other posts here, that really doesn't leave much room for them to drop prices whilst maintaining a healthy enough profit to keep shareholders happy and make it worthwhile.

buyers would get more reductions and a better deal negotiating with private sellers imho

this whole thread is a bit of a head-scratcher to be honest.

Thrugelmir

RUN_RABBIT_RUN wrote: »

if we just suggest for a minute that you're wrong and we say that the gross profit per houes is about 30k and the net profit is around 17k as suggested on other posts here, that really doesn't leave much room for them to drop prices whilst maintaining a healthy enough profit to keep shareholders happy and make it worthwhile.

Without profit there's no cash generated to buy further land to add to the bank.

GHutch_2

you can only get so much from theire accounts and prospectus etc.
they may well have increased profits by 100% but its along way from where they were as previously stated. You may find that sales completed in this financial year may have been agreed last year or the year before, there is a lag in the building trade.

They may well have had 'one off ' costs which skew the profits.

generally speaking I would say builders are having a hard time at the moment, BUt I think its an encouraging sign that they want to buy land, perhaps this means they are expecting to turn acorner and grow in the next 12-24months, something predicted generally for the economy, I think