John Martin, chair and interim CEO of Countryside, said that the group’s expansions into the regions had been “too ambitious”.
“After conducting a review of all operational sites, management has identified a number of areas where we can raise our game and our team is moving quickly to improve performance,” he said in the firm’s latest trading update.
Martin added that action would now be taken to consolidate regional resources, reduce costs by £15m per annum and create a strong platform for growth.
The move into offsite manufacturer from three timber-frame factories has left Countryside with excess capacity and forecast operating losses of £10m this year.
He said the board was now rethinking its MMC strategy and looking at all options to act quickly to minimise losses arising from manufacturing.
Martin also said that Countryside had failed to realise the benefits of the £135m Westleigh acquisition completed in 2018.
He said that project margins were very low and, in a number of cases, declined towards the end of projects in the former Westleigh territory. Some projects that were previously meant to have been finished were not completed to Countryside’s high standards, admitted the firm.
The South Midlands region is currently unprofitable and will be merged with the West Midlands region in order to consolidate teams and focus financial resources.
Its Northern business also experienced significant operational challenges.
These stemmed from delayed starts and failure of some groundworkers, timber-frame and roofing contractors to deliver to the required quality and in the required timeframe.
A new management team has been introduced to focus on building a strong and sustainable business in the region.
Countryside said it was continuing to off-load assets as part of its move out of traditional housing development in the Home Counties.
Realisation of a total targeted £450m of legacy assets since July 2021 has so far reached £150m, “slightly ahead of expectations”.
Average net debt at the business over the last 10 weeks stood at £115m.
Countryside said it had still to make a full assessment of the cost of its fire safety pledge to remediate unsafe buildings. This will be produced for the interim results in May.