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Sat October 16 2021

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Stewart Milne puts timber-frame business up for sale

2 days Stewart Milne Group has put its timber systems business up for sale to invest the proceeds in house-building across Scotland and northwest England.

The sale of the timber systems business is intended to allow a focus on investing in the growth of Stewart Milne Homes.

The house-builder and manufacturer of timber-frame for offsite construction said that is capitalising on Stewart Milne Timber Systems’ (SMTS) position as a market leader by selling the business when the market is set to grow exponentially.

Demand for timber-frame has been rising rapidly and its use is anticipated to double in the next five years to meet government housing targets, said the company.

“As house-builders tackle the dual challenge of achieving net-zero carbon targets and dealing with acute skills shortages, they are increasingly turning to modern methods of construction using renewable sources,” it said.

SMTS has experienced what the company described as ‘stellar’ growth in the last five years with a current order book of close to £300m. “This growth is attributed to a combination of technical and manufacturing excellence with strong customer relationships with the UK’s leading housebuilders, including Barratt, Taylor Wimpey and Cala,” it said.

The £100m turnover business, which employs 400 people, has about 20% market share, according to the company.

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Alex Goodfellow, Stewart Milne Group managing director - strategic development, who is leading the sale process, said: “With the scale of the opportunity in the growing timber frame market, SMTS presents a highly compelling investment proposition. We anticipate attracting a high level of interest from potential buyers who will invest in order to capitalise on that opportunity.”

Stewart Milne has been investing in SMTS’ product and manufacturing innovation and capacity at its factories in Aberdeen and Witney to keep up with demand. Increased volumes have led to the creation of a third production facility in central Scotland.

Chief executive Stuart MacGregor said: “To keep pace with demand, it’s clear that further investment in production capacity in both Scotland and England will be required. As a privately run, independent company, we need to prioritise where we invest in the future.

“Since reopening last summer, after the initial Covid lockdown, we’ve seen record levels of activity in the UK housing sector. The strength of our business with its award-winning developments, new homes range and record sales has enabled us to capitalise on these favourable market conditions and positioned us superbly for future growth.”

The buoyancy of the housing market, however, does mean that land prices in Scotland and northwest England are increasing rapidly, said MacGregor.

“We have therefore chosen to divest our successful timber systems business to increase investment in additional sites for Stewart Milne Homes. Using our considerable land buying experience to take advantage of the development opportunities, we will invest in land in the short term and concentrate on growing our homes business in the longer term.”

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