“I am very confident we can deliver a successful turnaround, returning Bovis Homes to being a leading UK housebuilder,” chief executive Greg Fitzgerald said today.
Former Galliford Try boss Greg Fitzgerald joined Bovis Homes as chief executive in April 2017 after the company ran into problems. Three months on and he has visited 85 sites and met most of the employees as he sets about reshaping the business.
Profits at Bovis were down in 2016 when its competitors were on the rise; it generated a lot of bad publicity about selling unfinished and poor quality homes and for having bad customer service. The share price plummeted; chief executive David Ritchie was sacked.
Bovis became a takeover candidate with both Redrow and Galliford Try making approaches. It rejected these but persuaded Greg Fitzgerald, who had only recently stepped down as executive chairman of Galliford Try, to come and run the company. [See our previous report here.]
In a trading update today for the first six months of the year, Mr Fitzgerald said: “The trading performance in the first half of our financial year is in-line with management expectations. In the past 11 weeks I have spent a good amount of time with each of our operating regions, visited 85 sites and met the vast majority of our people. We continue to identify and implement operational improvements and I am very confident we can deliver a successful turnaround, returning Bovis Homes to being a leading UK housebuilder.”
As announced back in February, Bovis has slowed its rate of production for 2017. Volumes for the full year are expected to be 10-15% below the 2016 level. In the first half it delivered 1,512 (2016: 1,601) completions of which 1,140 (2016: 1,212) were private units.
Profitability in the first half has been impacted by increased build costs and an increased level of investment across the business to address legacy problems. This includes a higher level of investment in site presentations to bring all developments “up to the high standard we and our customers expect”, Mr Fitzgerald said.
The customer service problems are also being tackled and most employees have been put through customer service training in the past six months.
Following the CEO's review of the business, Bovis has taken a further £3.5m of provision in the first half, taking the total one-off costs related to these legacy issues to £10.5m, of which £7m was provided for in 2016.
“This further provision will ensure we are fully resourced to complete the works identified as swiftly as possible whilst at the same time delivering the appropriate high level of service to our new customers,” the company said in its trading update. “ We are confident that all legacy issues are now identified and that where possible these issues will be fully dealt with and the related costs incurred during this financial year.”