Henry Boot interim profit falls by a third

Developer and construction firm Henry Boot has claimed a “resilient” performance in half year results to June 30 despite seeing its profit drop by 36% amid deepening economic uncertainty.

The firm saw its pre tax profit drop to £25m from £38.8m in the six-month period in 2022 and said the outlook for 2024 was “not so clear”.

Henry Boot’s turnover for the six months rose sharply on the back of a planned expansion in its housing business, increasing to £180m from £144m in 2022. The firm said its housebuilding subsidiary Stonebridge Homes sold 99 homes, up from 39 in previous year.

However, the Sheffield-based firm said the number of plots that its land promotion business had sold had dropped sharply, and that its construction business had so far managed to secure just 72% of its expected turnover for the year.

Tim Roberts, Henry Boot chief executive, said the first half of the year had seen its markets slow as interest rates had continued to rise. He said: “These results show our focus on prime strategic sites, high quality development and premium homes has provided us with a degree of resilience.

“Whilst uncertainty in our markets has increased, we believe we have enough momentum to carry us through the year, although the outlook for 2024 for the time being is not so clear.

Roberts said the firm nevertheless had “conviction in our three markets” and said the business remained on track to hit medium term growth and return targets.”

The planned expansion of Henry Boot’s housebuilding business remained on track, the firm said, with 97% of the targeted 250 sales for the year already secured as of September 1. Reservations per site per week dropped to 0.48 in the first half of the year, from 0.6 in 2022, Boot said, but have actually risen in the trading weeks since the end of the half year, to 0.52. It said the prices secured had been above budget.

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Sales at the firm’s land promotion business dropped to 1,900 plots, from 3,447 in the previous year, albeit the fall in volume was offset by increased profit per plot on the sales. Henry Boot said its construction business experienced “challenging” trading conditions given subcontractor and material availability issues which caused “delays and budget challenges” on two of its largest projects, including a £47m build-to-rent scheme, Kangaroo Works, plus an urban regen development Block H, worth £42m, both in Sheffield.

The business said the construction arm, HBC, was “trading below management’s expectations”, having experienced difficult operating conditions in line with the UK construction market.

Net debt at the business rose to £70.8m from £48.6m, as trading became more challenging.

The firm said: “There is no doubt that the rapid increase in short term rates is slowing the economy, reducing customer demand across our markets, and putting pressure, not least due to the funding costs, on the viability of residential and commercial schemes.

“Henry Boot is not immune to these pressures, but its focus on high quality real estate and customer care affords us some resilience.”