Miller Homes hails market resilience as earnings build

● Operating profits rise as housebuilder holds course for 4,000 homes per year

Edinburgh-based Miller Homes has reported strong market conditions and increased profits as it remains on track to achieve its 2021 target of 4,000 homes per year.

Operating profit at the housebuilder rose 15 per cent to £151.1 million in 2018, with inflation pushing the average selling price £10,000 higher to £249,000.

Operating margin surpassed the firm’s 20 per cent target for the first time and was “ahead of plan”, up from 19.5 per cent in 2017, while revenues were 11 per cent higher at £747m.

However, net profit fell to £82.9m, down from £87.7m, as finance costs more than doubled to £51.1m due to a change in the company’s debt structure taking effect in October 2017.

The firm hailed the strength of the UK housing market, particularly demand for midmarket homes and the twoyear extension of the UK govgrew ernment’s Help to Buy scheme to 2023.

The Help to Buy programme currently represents around one-third of the group’s private reservations in Scotland and England.

Miller admitted that the UK housing market is “not immune to Brexit headwinds” but said it was reassured by “how the sector and our business has performed thus far in spite of the daily speculation surrounding the nature of the UK’S departure from the EU”.

Around 90 per cent of the firm’s housebuilding materials are manufactured in the UK, although the business said it had undertaken a full review to understand the potential impacts of a no-deal Brexit and has drawn up contingency plans “to ensure the impact on material supplies is mitigated”.

Miller completed 3,170 homes in the 12-month period, 735 of these in Scotland, representing a 14 per cent rise from the previous year.

It reported a “rigorous approach” to land selection although its owned landbank 10 per cent to 9,174 plots, supported by a further 3,350 controlled units.

This has an estimated gross development value of £2.4 billion.

The firm said it remains “on track” to deliver its strategic target of building 4,000 homes annually by 2021 and cheered a 6 per cent rise in forward sales at £292m.

The group also launched its West Midlands arm last year and grew head count by 11 per cent to around 970 staff across all divisions.

Chief executive Chris Endsor said:“demandformid-market homes continues to be strong, underpinned by low interest rates and Government support with Help to Buy extended to 2023.

“We continue to have confidence in the resilience of the UK regional housing markets in which we operate and remain committed to our strategy of growing volumes incrementally to 4,000 units.

“Market conditions are continually monitored with the optionality in our business planning enabling us to adapt land buying depending upon demand and opportunities.”