Bovis profits plummet 83%, dividend slashed

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by Kay Murchie

Housebuilder Bovis has announced that interim profits have fallen 83% in the first-half of 2008.

The housebuilder blamed the mortgage squeeze for the fall as well as a sharp decline in house prices over the last year.

Furthermore, Bovis has cut its dividend from 17.5p to 5p and warned that there is no end in sight to the slump in the housing market.

The group said it had reserved 795 homes for individuals and families as of the end of June, compared with 1,621 a year ago. Reservation levels to August 22 had continued to be notably lower, it added.

Although not all reservations turn into completed purchases, the figure is the best indication of future purchasing by private individuals.

In the same half-yearly period, the housebuilder said it sold 624 homes, down 43% compared with the same period last year.

Like other housebuilders, Bovis has reduced its workforce since the start of 2008 in a bid to save costs.

Last week, Persimmon, reported a 64% slump in first-half pre-tax profits to £100.9 million for the half-year to the end of June, this compares with £281.1 million in the same period last year.

Persimmon, which is the UK’s largest by market value, has also slashed its dividend by 73% to 5p a share in an attempt to save cash ahead of a challenging autumn.

Furthermore, housebuilder Bellway reported a 45% fall in reservations of its homes in the second half of the financial year, compared with the same period last year.

Bellway added that completed sales had dropped by 14% compared with last year as the mortgage squeeze meant that prospective buyers were unable to secure funding.

Meanwhile, housing giant Taylor Wimpey is expected this week to report a sharp fall in profits and is to cancel its interim dividend and write-down the value of its UK land by £550m.