Housebuilder Bovis Homes Group Plc reported an 18 percent rise in first half profit on Monday and kept its expectations for the year unchanged, citing a steady housing market.
The steady housing market experienced during the first six months has continued through July and August, with sales reservation levels ahead of the corresponding period in 2005, the firm said in a statement.
Looking forward, based upon the group's trading experience to date, the board's expectations remain unchanged in respect of profits for the full year.
Chief Executive Malcolm Harris told Reuters the firm expected volume growth of 15 percent in 2006 and that he expected the average rise in its selling prices to moderate in the second half to register the annual growth of around 4 to 5 percent.
Bovis, which specialises in mid market and commuter belt housing, posted 53.1 million pounds in pretax profit for the six months to end June, up from 45.1 million a year ago.
Sales rose 17 percent to 250.5 million pounds as Britain's housing market has started recovering from a year long slowdown since late 2005.
Despite a surprise interest rates hike by the Bank of England in August, the housing market remained resilient as the rates are still relatively low and affordability continues to remain a constraint, it said.
There's no real sign of inflation in housing rising above the level of increase in earnings. So it's broadly in line. We are seeing an increase in selling prices at the moment, but it's just below the average increase in earnings, which appears to be quite sustainable and logical, Harris told Reuters.
Harris expected annual volume to grow to 3,150 completions, while second half gross margins were seen broadly in line with the first half's 33.2 percent.
Shares in Bovis were unchanged at 861 1/2 pence by 8:25 a.m., valuing the group at around 1.0 billion pounds.
Bovis' forward sales stand 11.5 percent higher than 2005 and this supports management's views in expecting to meet expectations for the full-year, Bridgewell Securities said, adding it was maintaining its full year forecast and 'neutral' ratings.
Bovis is expected to post 126 million pounds in year pretax profit on a sale of 595 million, according to Reuters Estimates.
It raised its interim dividend 20 percent to 10 pence a share.