Friday preview: Bovis Homes reports full-year trading update

Bovis Homes reports its full-year trading update on Friday after warning in late 2015 that annual profit margins would be hit by planning delays and rising costs.

In the company’s last trading statement, released in November, Bovis revealed said it expected its operating profit margin for 2015 to be only marginally ahead of last year’s 17%. It blamed delays in planning on a number of sites and labour shortages.

“Given that Bovis' profit warning in November seemed to be an isolated event, there is clearly a question as to what is going wrong,” UBS said at the same of the release.

“We think there is a combination of (1) smaller scale, making cost control more challenging compared to larger peers; (2) additional pressures from growth ambitions which often lead to additional front end loaded costs; (3) relatively larger sites which Bovis is not able to turn as quickly as needed to hit appropriate ROCE.”

In a note released on Thursday, UBS said it expects Friday’s trading update to show full-year revenue of £937m.

Volumes are forecast to rise 8% year-on-year to 3,936 at an average selling price of £232,400, up 7% year-on-year.

“Bovis had previously warned margins would only marginally improve: as a result we expect 17.1% operating margins, up 10 basis points on the year,” said UBS analyst Gregor Kuglitsch.

“We will be looking out for further guidance on margins into the new year after the disappointing performance in 2015.”

Meanwhile, US retail sales will also be released on Friday with analysts predicting a 0.1% drop in December sales, compared to 0.2% in November.

US manufacturing and industrial production data is also due along with the University of Michigan’s consumer confidence survey for January.

Friday 15 January

INTERIM DIVIDEND PAYMENT DATE
Acal, B&M European Value Retail S.A. (DI), Betfair Group, Bilby, British Smaller Companies VCT, JPMorgan Euro Small Co. Trust, Severfield, Tarsus Group, UK Mail Group , World Trust Fund

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (EU) (10:00)
Business Inventories (US) (15:00)
Capacity Utilisation (US) (14:45)
Industrial Production (US) (14:45)
Manufacturing Inventories (US) (15:00)
New Car Registrations (EU) (10:00)
Producer Price Index (US) (13:30)
Retail Sales (US) (13:30)
Retail Sales Inventories (US) (15:00)
U. of Michigan Confidence (Prelim) (US) (15:00)
Wholesale Price Index (GER) (07:00)

EGMS
BCRE - Brack Capital Real Estate Investments N.V. (DI)

TRADING ANNOUNCEMENTS
Bonmarche Holdings, Bovis Homes Group, Experian

FINAL DIVIDEND PAYMENT DATE
Carr's Group, K3 Business Technology Group, Northamber, Witan Investment Trust Plc