Top 150 contractors and housebuilders: Part 2

It’s the time of year again when Building reveals its exclusive Top 150 contractors and housebuilders league tables. 

Today we are releasing the details of just the top 20 housebuilders by housing turnover with analysis, plus the top 10 housebuilders’ profit per house sale.

It’s been a phenominal year for housebuilders – their fifth year of growth, with turnover, profit and margins all on an upward trend.

On Friday the complete data set will be available, including:

• Top 150 contractors and housebuilders by turnover
• Top 20 contractors by contracting turnover 
• Top 20 housebuilders by housing turnover
• Top 10 housebuilders* profit per house sale
•  Additional tables with aggregated data that allows you to compare total turover with average margins

 Yesterday we released companies 101-150 in the Top 150 contractors and housebuilders’ tables. 

 

* see methodology and notes below

2018	2017	Company	Total turnover £000	Change on 2017	Pre-tax profit £000	Year end	Contracting £000	Housing £000	Property £000	Services £000	Other £000
1	1	Barratt Developments	4,650,200	9.80	765,100	Jun-17		4,589,100	61,100
2	2	Taylor Wimpey	3,965,200	7.86	682,000	Dec-17		3,965,200
3	3	Persimmon	3,422,300	9.10	966,100	Dec-17		3,422,300
4	4	Berkeley	2,703,700	-0.73	934,900	Apr-18		2,703,700
5	5	Bellway	2,558,561	14.19	560,723	Jul-17		2,558,561
6	6	Redrow	1,660,000	20.12	315,000	Jun-17		1,660,000
7	11	Galliford Try	2,820,200	5.61	58,700	Jun-17	1,526,900	1,267,600			25,000
8	8	Crest Nicholson	1,043,200	4.63	207,000	Oct-17		1,043,200
9	7	Bovis Homes	1,028,223	-2.52	114,001	Dec-17		1,028,223
10	10	Bloor Homes	917,705	27.73	152,521	Jun-17		917,705
11	15	Countryside Properties	845,800	25.99	141,700	Sep-17		845,800
12	14	Cala	747,928	27.40	70,445	Jun-17		747,928
13	12	McCarthy & Stone	660,900	3.93	92,100	Aug-17		660,900
14	-	Morgan Sindall	2,792,700	9.02	64,900	Dec-17	1,332,600	473,500	185,900	66,200	734,500
15	17	Keepmoat Homes	423,199	25.70	25,435	Mar-17		423,199
16	16	Kier	4,282,300	4.90	25,800	Jun-17	2,019,400	375,700	182,000	1,688,100
17	-	Avant Homes	368,973	3.43	20,631	Apr-17		368,973
18	-	Telford Homes	316,241	8.33	46,308	Mar-18		316,241
19	20	Morris Homes	283,651	5.74	27,618	Mar-17		283,651
20	13	Places for People1	234,192	137.12		Mar-17		234,192

 

Top 10 housebuilders’* profit per house sale

Housebuilder	Average selling price	Homes sold	Pre-tax profit per home sold
Barratt Developments	£313,100	17,395	£47,387
Taylor Wimpey	£264,000	14,541	£57,328
Persimmon	£213,321	16,043	£60,219
Berkeley Group	£715,000	3,536	£220,475
Bellway Plc	£260,400	9,644	£59,265
Redrow Group Plc	£309,800	5,416	£59,453
Galliford Try	£354,000	3,890	£47,609
Crest Nicholson Plc	£340,000	2,935	£72,095
Bovis Homes	£272,400	3,645	£35,125
Bloor Homes	£300,000	3,023	£52,002

*Housebuilders ranked by overall turnover

The housebuilders’ story

Housebuilders in the top 150 accounted for 42% of the turnover (£43.6bn) and 87% of the pre-tax profit (£6bn) of the firms ranked.

While smaller housebuilders showed some signs of catching up with the biggest in terms of turnover, the top 10 housebuilders retained their dominance in profitability, making two out of every three pounds of profit in the whole Top 150 at an average pre-tax profit margin of 19.2%. This compares with 13.8% for housebuilders in general. 

The single most profitable housebuilder, Berkeley, made £220,000 in profit out of every single house it sold.

While average wages at housebuilders rose by 1.4% over the past year, the remuneration of the highest-paid director increased by an average of 95% – boosted by Persimmon’s controversial bonus scheme. Discounting Persimmon, director remuneration still rose by 14% on average.

The single most profitable housebuilder, Berkeley, made £220,000 in profit out of every single house it sold

However, the first signs of weakness have started to appear following years of quick growth, with the likes of Bovis Homes, Crest Nicholson and McCarthy & Stone all announcing profit warnings over the past 18 months.

Kevin Cammack, analyst at Cenkos, says: “We’re definitely getting late on in the market cycle, albeit we’re not where we were in 2008 where we were facing devastating collapses. Housebuilders have infinitely stronger balance sheets than then.” 

Weighing on the sector are slowing sales rates, particularly in London and the South-east, the spectre of future interest rate rises, and fears that existing government support in the form of Help to Buy won’t be sustained indefinitely.

“The political climate is much more changeable,” says Cammack. “Can the current incredible support to the sector continue?”

Jan Crosby, managing director at KPMG, says that in response housebuilders need to ensure they are not carrying high levels of debt, and consider diversifying away from total reliance on building homes for sale: “They need to think about build to rent. It allows them to de-risk their revenues while showing government they are doing what they can to find ways to accelerate construction.” 

 

Methodology

This Top 150 construction company analysis refers to those companies identified by Hewes & Associates as the Top 150, which have results available for 2017/18, and which are housebuilders, building and civil engineering contractors, building fit-out contractors, M&E, and FM/building/civil engineering or maintenance companies. 

Larger companies whose 2017/18 results are not yet available have been included  with their 2016/17 results, while smaller companies in such a position have not been included. 

Turnover includes joint ventures. Ranking comparisons have been affected by the inclusion of companies that were not included in last year’s rankings, and owing to revised methodology, and some cases where there have been changes in corporate reporting, such as a different year end, comparators on figures published last year are not always possible. 

Data compilation and analysis was undertaken by Hewes & Associates, to which any queries on the data should be directed: 01428 641518, hewesinfo@aol.com or at www.hewes-associates.com

Notes

¹Places for People profit data not available