Galliford Try profits soar on house building push south

Aaron Morby 12 years ago
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Galliford Try profits soared in the first half of the year as its housing expansion into the south east paid off with margins hitting 11%.

The housing and construction giant also held its contracting performance in a “competitive market” with profits flat at £10.9m.

Contracting revenues rose 13% to £500m as much of its regulated work order book reached peak cycle, but operating margins slipped back to 2.2% as competition increased for work.

Overall group revenues jumped by nearly a third to £747m, with housing nearly doubling pre-tax profits, up from £17m to £32m.

Housing completions jumped to a record 1,352 putting the firm on course to be a top five house builder.

    At a glance

    Housebuilding
    Revenue: £277.0m (£152.9m)
    Profit from operations: £35.0m (£9.9m)
    Operating profit margin 11.0%* (6.5%)
    * excluding significant land sale

    Construction
    Revenue: £499.9m (£442.6m)
    Profit from operations: £10.9m (£10.9m)
    Operating profit margin 2.2% (2.5%)

Greg Fitzgerald, chief executive, said: “The Group is confident that it is on track to deliver all the objectives of its three year housebuilding expansion plan during the current financial year with our southern biased business performing strongly despite the general economic uncertainty.

“The housing market has remained resilient and we are encouraged by the continued strength of the market during the first seven weeks of 2012.”

He added: “The spread of long term work in the group’s construction business is underpinning its strength in difficult market conditions.

“Following our rapid expansion in housebuilding, the group will continue its disciplined focus on the regions and market segments where we have proven expertise and experience, concentrated on the south of England.”

He said: “This approach is expected to deliver revenue and profit growth and support an enhanced dividend and a progressive dividend policy going forward.”

On the contracting side, infrastructure took over as the main contributor to construction profits with its performance up from £4.7m last time to £5.2m, while building dropped to £4.6m from £5.1m.

Galliford Try said it expected margins to edge down in the full year as jobs won against increasingly fierce bidding competition eroded returns.

The construction order book was in line with expectations at £1.6 bn (H1 2011: £1.75bn). Some 42% was won in the regulated sector, 44% in the public sector and 14% in the private sector.

The division has secured full projected revenue for the current financial year and 67% for the next financial year.

Cash in the business remained strong at £149m.

Galliford Try said the affordable housing contracting sector was developing slowly as clients adapted to new market rental funding models. Its Partnerships business remained flat making a 1.1m profit on sales of £51m.

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