WILSON BOWDEN, the housebuilder, shrugged off a 14 per cent drop in interim profits yesterday, saying it was confident about a second-half recovery despite the prospect of more interest rate rises.
Shares in the company, which became the first housebuilder to report a fall in profits this year, slipped 52p to £16.98p from a record high after it provided no update on a review by NM Rothschild of the 33 per cent stake held by David Wilson, the firm’s chairman and founder.
HBOS is believed to be considering a possible bid for the housebuilder, but any approach is likely to depend upon agreeing a deal with Mr Wilson.
Wilson Bowden declined to comment on any potential takeover interest, insisting that it was focusing on building more homes and increasing sales volumes to help to offset declining profit margins.
Margins in the company’s core David Wilson homes division fell from 19.6 per cent to 16.7 per cent in the first half, dented by higher energy costs and land prices.
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In the second half, analysts are expecting a slight margin improvement.
Sales volumes are also expected to bounce back in the second half, as some of the record £387.3 million of advance reservations translates into hard sales.
Ian Robertson, the chief executive, said that sales had accelerated last month compared with July, and there were early signs that the trend was continuing into the crucial autumn selling season.
The group has increased its sales outlets and has also agreed to sell more homes at an earlier stage in the construction process.
Wilson Bowden reported pre-tax profits of £85.5 million in the 26 weeks to June 30, on revenues down to £525.2 million from £554.9 million.
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In the first half the company completed 2,135 homes, down from 2,190, with an average selling price of £206,300. In the full year, analysts are expecting sales volumes of between 5,400 and 5,500, up from the 5,027 recorded last year.
The company said that it believed that house-price inflation had peaked for this year and prices would not begin to rise again until the spring.
Analysts at Bridgewell Securities reiterated their “buy” recommendation, noting that the first-half figures came in slightly ahead of its forecasts.
The broker said that it remained a buyer because the group’s 10 per cent discount to the wider sector was unjustified in light of its prospects for growth in the second half of the year and beyond.