Springfield switches strategy as private housing slumps

Grant Prior 9 months ago
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Scottish house builder Springfield Properties is halting work on speculative private housing sites as demand droops.

The move is a shift from this time last year when Springfield decided to focus on private starts and put all future affordable housing and build to rent schemes on hold due to rising costs and the Scottish Government’s plan to freeze rents in the face of the cost of living crisis.

Springfield is now back in the affordable homes market which it says has “strong cash flow dynamics and high revenue visibility.”

It will now be prioritising cash generation to reduce £67.7m of debt and “curtail speculative private housing development by only commencing building homes when they are reserved.”

Other tactics will include boosting land sales and stopping dividend payments to shareholders.

The strategy was contained in results published Wednesday afternoon which showed pre-tax profit for the year ended May 31 2023 down to £15.3m from £19.7m last time on turnover up to £332.1m from £257.1m.

Pre-tax profit forecasts for 2024 are now £10m-£14m with net debt hoped to drop to £55m.

Innes Smith, Chief Executive Officer of Springfield Properties, said: “Trading conditions have remained tough into the new financial year as private housing reservations continue to be impacted by reduced homebuyer confidence.

“We do not expect to see any material improvement in homebuyer confidence before next Spring. Our priority is to maximise cash generation to reduce our debt to ensure that we maintain the value of our business.

“Accordingly, we are pausing all speculative private housing development. We will build based on sales and not sell based on build. We are actively pursuing land sales and will further reduce our cost base where necessary.

“We are also encouraged by the negotiations we are now having in affordable housing, which has strong cash flow dynamics.”

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