Housing market downturn fails to dent profits as contractor says £60m-plus target will be met

Shares in builder Galliford Try rose almost 9% this morning after it said it will hit profit targets for the year to 30 June 2008, despite the collapsing housing market.

The construction and housebuilding company said it had seen the average sale price of its homes fall 12% on last year, but had nevertheless managed to build 2,524 homes, a 4% increase in the same period.

In a trading statement ahead of its final results, which are to be released on 11 September, Galliford Try said that full-year profits for the 12 months to end of June will be “no less than” £60m, as previously forecast.

The UK contractor also said that it has reduced its debt gearing to less than 2% and that it is in no danger of breaching banking covenants for its banking facility, which lasts until 2012.

Forward sales of homes are down from £185m to £150m, a drop of 19%, but Galliford Try said it still has a forward order book of £900m for construction.

The statement said: “We have implemented a comprehensive programme of overhead savings in our housebuilding division, amounting to £12m on an annualised basis, which together with work in progress reductions will ensure our cost base matches the forecast level of business for the next financial year.

“The housebuilding market has shown no signs of improvement since our interim management statement was issued in May, with the restrictions on mortgage availability and low consumer confidence keeping the market weak.”