Bovis Homes sees profit dip as it vows to improve standards

Shares in Bovis Homes slumped after it posted a fall in profits after "a difficult year" which saw the housebuilder face complaints over building standards.

It said full-year pre-tax profit slipped 3% to £154.7m ($192.3m), after it wrote off £7m in a one-off payment to customers following "weaknesses in our production process and a high level of customer service issues". The stock more than 9%, or 78.5p to 762.5p in early trading.

The company faces accusations it was pressuring buyers to move into unfinished homes with cash incentives, just before it issued a profit warning in December.

Bovis chief executive, David Ritchie, resigned last month following a profit warning at Christmas prompted by the group's failure to complete about 180 of its planned homes by the end of the year.

At the time it said profit would come in at between £160m and £170m, but the firm missed this target today (20 February).

The group said it built just under 4,000 homes last year, up 1% on a year ago. Its average selling price jumped by 10% to £254,900.

But the business said it planned to build around 10% to 15% fewer homes this year as it upgrades its customer service and building standards.

It said: "We have embarked on a programme to deliver significant and urgent improvement in underlying processes across the business, focused on the delivery of the highest quality of product and service to our customers."

Bovis interim chief executive Earl Sibley added: "With our focus on higher levels of customer service, improved build efficiency, and a refreshed culture, we are confident we will generate enhanced shareholder returns over the medium term."

But Shore Capital analyst Robin Hardy said: "This statement suggests a business with more problems than were anticipated so the attraction of this business has reduced, in our view."