Shares drop at battered Bovis

SHARES in Bovis Homes fell 10 per cent as it said it would slow construction this year after taking a £7million hit to rebuild its battered reputation following complaints about the quality of its homes.

More than £100million was wiped from the value of the FTSE 250 builder as its annual pre-tax profit fell 3 per cent to £154.7million. Profits will be lower again this year as it builds fewer homes.

Bovis, whose chief executive of eight years David Ritchie quit last month after a profit warning, announced a series of measures to improve its customer service.

It had been accused of pressuring customers to move into unfurnished properties before Christmas by offering them cash incentives of up to £3,000 in a bid to meet City forecasts before the end of the financial year.

The company admitted the last year had been “difficult” as it struggled to meet ambitious growth targets. Customer service standards have been in decline “for some time”, resulting in a £7million provision to address “a high level of customer issues”.

Interim chief executive, Earl Sibley, said: “Recent experiences of a number of customers fell below the high standards they rightly expected from Bovis Homes, for which we have apologised.

“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 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.”

Bovis said output this year would be 10 to 15 per cent below 2016, with an “inevitable” impact on earnings and cash flow, but it intends to maintain its dividend payout at this year’s level. Jefferies analyst, Anthony Codling, said: “The priority in 2017 is to significantly raise the level of customer service and Bovis is putting its money where its mouth is. Costs will rise and volumes will fall until the group has dealt with the root causes of the problem.” Bovis shares fell 86p to 755p.