Housebuilders on the move as profits flood in
HOUSEBUILDERS were stacking up the gains as Bovis
Homes became the latest firm to signal record profits.
It is on course to beat analysts’ profit predictions of £166m in its 2018 results, due at the end of February, and followed rivals in saying the housing market looked robust at the start of this year.
It came a day after Persimmon said it would be the first builder to exceed £1bn in profits, with both boosted by the taxpayerbacked Help To Buy scheme.
Revived hopes of a softer Brexit, following Theresa May’s failure to push through her deal for leaving the EU through the House of Commons, helped.
Investors feared that the economy could slow if the UK suddenly cut ties with the continent, and this has weighed on companies like Bovis since, theoretically, fewer people would buy houses.
But it said the UK housing market ‘remains strong, with demand for new homes supported by attractive mortgage finance and Government initiatives’. The same optimism caused Metro Bank to soar, as the lender’s shares lifted 10.1pc, or 188p, to 2056p.
Bovis said uncertainty surrounding Britain’s departure from the EU slowed sales of larger homes, however. For 2018, it built 3,759 homes, 3pc up on the previous year. The average selling price rose to £273,000 from £272,400.
Greg Fitzgerald, the chief executive, said: ‘ The significant improvement across all areas is expected to deliver a record year of profits.’
Bovis was up 3.8pc, or 35.4p, to 962.2p, Persimmon climbed 5.4pc, or 119p, to 2320p, Taylor Wimpey rose 5.6pc, or 8.75p, to 164p and Barratt Developments edged up 3.9pc, or 19.5p, to 518p.
Education company Pearson hasn’t yet turned over a new leaf with investors, as shares fell following an update on 2018.
Although it said profits would be in the region of £540m to £545m, at the central point of previous guidance, this was driven by higher cost savings rather than improved performance. Revenue was down 1pc.
The textbook seller has desperately been trying to break into the digital education market, as demand for books has declined.
Digital products now account for 55pc of US course materials sales, up from 50pc in 2017, though growth has not been fast enough to offset the decline in sales.
George Salmon, equity analyst at Hargreaves Lansdown, said there was good news in that digital products were increasing in popularity. But he added that its shift ‘from far-reaching media conglomerate into digital education specialist is a risky one, and Pearson is nearer the start than the finish line’. Shares fell 6pc, or 58.4p, to 918.2p.
Despite the housebuilders’ gains, Pearson dragged the FTSE 100 down by 0.5pc, or 32.34 points, to 6862.68. Bread and cake manufacturer Finsbury Food Group was also left feeling flat as it released a trading update for the latter half of 2018. The maker of Disney-branded cakes, Thorntons baked goods and Weight Watchers snacks plummeted 10.5pc, or 9.8p, to 83.2p, after revenue slipped 3.5pc to £152.3m. Drinkers propped up The City
Pub Group, as total revenue leapt by 22pc to £45.6m in the 52 weeks to December 30. The majority of the 1.6pc like-for-like growth was driven by increased sales, the South of England chain added, since price increases only kicked in at the end of 2018. It owns and runs 44 pubs, and shares fizzed up by 5.1pc, or 10p ,to 207p.
Over-50s insurance and travel specialist Saga declined, as it warned competition in the insurance sector was tough. Shares dipped 1.7pc, or 1.7p, to 101.5p.