Expansion on course
Miller Homes hails ‘significant’ growth in uncertain climate
Confidence: Chris Endsor
Despite “unprecedented political uncertainty” Miller Homes has reported a 10% increase in half year profit of £77.8m.
The Edinburgh-based housebuilder also posted a record level of forward sales, up 7% to £368m, while there was a 13% increase in core and joint venture completions to 1,684 homes for the six months ended 30 June.
An operating margin of 20% was unchanged compared to the same time last year, while the return on underlying capital employed (ROCE) was 30.9% with c3,600 plots acquired in the last 12 months.
The company remains on track to deliver 4000 homes by 2021 and chief executive Chris Endsor said: “Miller Homes has again achieved significant levels of growth, with volumes up 13% and operating profit 10% ahead in the first half of 2019.
“To have delivered an operating margin of 20% demonstrates the resilience of our regional markets and the group’s disciplined approach to land buying and cost control. Customer demand has remained strong set against a backdrop of competitive mortgage rates but just as importantly an overwhelming need for many of our customers to acquire a new home.
“As a further sign of our confidence in our regional markets, we invested significantly in land in the period, acquiring 12 sites at a cost of £94m.”
The company said that a drop in the average selling price from £248,000 to £243,000 reflected the sale of lower value units in a legacy development.
A strategy is in place to continue its UK expansion and Mr Endsor added: “Our regional proposition, supported by significant land investment, excellent build quality and customer service delivered by a highly engaged workforce mean that we are on track to achieve 4,000 homes by 2021.”
The chief executive’s review went on: “We have maintained our disciplined approach to land buying and all land acquired in the period was at or above the group’s hurdle rates.
“Our owned landbank increased by 5% to 9,668 plots (Dec 2018: 9,174 plots) and all sites which benefit from an implementable planning permission are being developed.
“The group’s highly–experienced strategic land team has made significant progress in the period in both acquiring new sites and investing in new options. The strategic landbank has increased by 7% to 18,591 plots (Dec 2018: 17,331 plots) and serves to underpin the planned future growth of the business.
“Despite unprecedented political uncertainty, the housing market in our regional markets has remained robust with demand levels remaining high for good quality new build homes.
“In recent years, we have seen price inflation of c3% per annum in our regional markets and this has been more subdued latterly but still remains positive. Material and labour availability is generally good with cost inflation averaging 3 to 4% per annum but being mitigated through longer-term pricing agreements and efficiencies from a product review initiated in 2018.
“The group’s centralised procurement team has been in close dialogue with our national suppliers and plans are in place in the event of a no deal Brexit.”