Building Homes Datafile

The month
In spite of falling volumes homebuilders are keeping the market happy by reporting increased profits on the back of big house price rises. The market accepts volumes may fall further over the next year, and the economy may weaken, but sees house prices still rising as demand outstrips the reduced supply.

Stockwatch

• Crest Nicholson has reported six month pre-tax profits up 14% to £25.1m on turnover 16% higher at £265.1m to April 30. The company completed 814 homes, down 37, at an average price up almost £30 000 to £194 700. Crest is concentrating on large-scale developments and sold £19m of surplus land at a profit of £5.5m.

• Persimmon has announced annual savings from its acquisition of Beazer will exceed £33m, up from the £20m originally estimated. Persimmon has closed 12 Beazer regional offices and reduced staff numbers by 660 at a cost of £12m. Beazer reported an operating margin of 11.5% last year, below those of Persimmon at 15.5%. But chief executive John White said it would be some time before the combined group's margins would reach those of Persimmon previously.

• Berkeley's full-year pre-tax profits have risen by 24% from from £143.6m to £178.1m. Berkeley said it had seen a strong start to 2001, as the feelgood factor in the economy and falling interest rates encouraged more people to consider home ownership. Sales reservations in May and June were at record levels, the group said. Despite a fall in the number of houses sold in the year - 2542 compared with 2915 - the average selling price increased by over 10% to £278 000 against £251 000 in 2000.

• John Laing has sold a 27.5% stake in US-based WL Homes to a US private investment consortium. John Laing Homes will realise £31m cash and £21m in preference shares. Laing will record a £3m loss on the disposal, but will retain a 22.5% stake in the company.

Business fact
Background on UK housebuilders
Aim-listed Propan Homes has reported profits up 65% to £1.93m compared to £1.17m the previous year. Turnover also doubled to £9.98m from £4.28m year-on-year. The company sold 38 residential units ranging from one bedroom flats up to substantial executive detached houses. Construction is currently under way, or is due to commence, on 12 sites which should produce more than 6O units for sale during the current year. Propan is planning to spend £300m on land purchases in the South East this year. Fellow Aim-listed homebuilder Artisan (see graph above) purchased an 11.7% stake when Propan came to the market in March.

White goods watch
UK sales of upright freezers
After a very strong period of growth in 1999 the UK freezer market has struggled to maintain strong growth rates into 2001.

This failure is especially evident in value terms as despite the shifts towards larger, more efficient appliances prices are continually under pressure as the vast majority of the activity is at entry price points. This is indicative of a product which consumers now view as a commodity.

The freezer market has been hampered by the shift towards fridge freezers; over the past two years over 3% of the household population have switched from owning a separate fridge and freezer to a combined two door appliance. Consumer trends towards fresh food have also decreased the demand on freezing appliances.

However it is still a huge market which due to freezers frequently being purchased at the same time as a fridge behaves in a very similar fashion to the larder fridge market. As a consequence we have seen a movement towards larger capacity freezers and much more energy efficient models.

"The vast majority of purchases are replacement purchases and due to the recent mild rather than hot summers that Britain has been experiencing there has been a lack of strain placed on the older appliances which have therefore not broken down. This has dampened the demand as well over two thirds of the market is accounted for by consumers replacing a broken down freezer," reports GfK Marketing Services account manager Aaron Rattue.

Did you know?
Tory leadership hopeful Ian Duncan Smith joined Bellwinch Property, then a housebuilder, as marketing director in 1988. His timing could not have been worse. "I joined as Nigel Lawson sent interest rates rocketing. They were holding lots of property." The firm made him redundant.
Source: profile of candidates in the Financial Times.