Housing market turmoil brings down contractor's expectations but profit still likely to be level with last year

Galliford Try has been forced to issue a profit warning as the turmoil in the housing market continues to take its toll on the sector.

In its interim management statement to the stock exchange, the UK company said that the housebuilding market had shown a “further sharp deterioration in recent weeks”, resulting in an increased cost of incentives and a reduction in reservations.

The company said that legal completions in the key period leading up to the end of its financial year would fall short of expectations. It said pre-tax profit for the group for the year to 30 June would be no less than £60m, roughly level with last year when it posted a post-exceptional profit of £60.2m.

The company said, however, that its growing strength in affordable housing and regeneration had helped its overall performance. These divisions have reserved, contracted or completed sales with a value of £645m, compared with £463m at this point last year. Of this total, £529m is for the year to 30 June 2008, compared with £338m at this point last year.

The company's construction businesses are also performing well, with total work in hand for its building and infrastructure divisions standing at £2.0bn.

The company also announced a management reshuffle. Andy Sturgess, managing director of the building division, is due to retire at the end of December and will be replaced by Stuart Gibbons, who will move over from his role as managing director of Galliford Try Partnerships on 1 July.

Stephen Teagle will become managing director of the group's affordable housing and regeneration division, while Paul Cooper is appointed managing director of the group's South-east housebuilding division. Both Teagle and Cooper are internal appointments