McCarthy & Stone shift­ing fo­cus to bun­ga­lows and rental sec­tor

The Daily Telegraph - Business - - Business - By

Is­abelle Fraser MCCARTHY & Stone, the re­tire­ment house­builder, is bet­ting on bun­ga­lows and rental prop­er­ties as it strug­gles to sell its homes in a slug­gish mar­ket.

Its pre-tax profit fell by 1pc in the year to Aug 31, in line with ex­pec­ta­tions, while rev­enue inched up just 4pc to a record high of £635.9m. De­spite the lack­lus­tre re­sults, its share price rose 6.7pc to end at 157p.

It came as the trou­bled house­builder Bo­vis said it was “mak­ing en­cour­ag­ing progress” in re­struc­tur­ing the busi­ness af­ter a se­ries of profit warn­ings, takeover of­fers and a new chief ex­ec­u­tive. Bo­vis said: “The de­mand for new homes con­tin­ues to be ro­bust across all our re­gions and cus­tomer in­ter­est re­mains good”.

Un­like other house­builders, in­clud­ing Bo­vis, McCarthy & Stone does not ben­e­fit from any gov­ern­ment pol­icy, such as Help to Buy, and re­lies on the volatile sec­ond­hand mar­ket in or­der to sell its homes. Its cus­tomers largely must sell in or­der to down­size and buy McCarthy & Stone homes, and as the level of trans­ac­tions has slowed, the com­pany has suf­fered as a re­sult.

Clive Fen­ton, the chief ex­ec­u­tive, said the mar­ket was “chal­leng­ing”, adding: “Our full-year com­ple­tion vol­umes were in line with the prior year de­spite com­pany was work­ing with hous­ing as­so­ci­a­tion Places for Peo­ple to help “di­ver­sify our model”, by build­ing re­tire­ment homes for rent, which he iden­ti­fied as a “very big and un­der-sup­plied mar­ket”.

He also said that the com­pany was try­ing to bring back bun­ga­lows, the sup­ply of which has re­cently tum­bled as it is dif­fi­cult to be com­pet­i­tive when buy­ing land for this type of hous­ing.

An­thony Codling, an an­a­lyst at Jef­feries, said: “McCarthy’s op­er­a­tional per­for­mance demon­strates that the mar­ket re­mains chal­leng­ing with­out Help to Buy, but in our view McCarthy & Stone is ris­ing to that chal­lenge.”

He added that the re­sults were “en­cour­ag­ing as we ex­pect growth in con­struc­tion and sales ac­tiv­ity to out­weigh chal­lenges in the mar­ket”.

Bo­vis said its av­er­age sales rate inched up, with trad­ing in line with ex­pec­ta­tions, adding that through dis­pos­als it would have £20m more cash at the end of the year than fore­cast. Its shares rose 2.7pc to £11.35.

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