Henry Boot said it had “performed well” against the backdrop of a slowing economy and higher interest rates for the financial year ended 31 December 2023.
In a trading update for the year, ahead of the announcement of its full-year results on 25 March 2024, the company said it had generated “robust” sales within its property development and strategic land businesses and expected profit before tax for the year to be in line with current market consensus.
Henry Boot said activity reduced in its three key markets of industrial and logistics, residential and urban development, and the group’s construction division traded below expectations, but remained profitable.
It said performance on two significant projects were impacted by the availability of materials and the resultant delays, but its construction division began 2024 with 46% of its order book secured and is actively pursuing an “encouraging number” of new opportunities.
The group’s land division Hallam Land Management (HLM) also sold fewer plots last year – 1,944 compared with 3,869 plots in 2022 – however, average gross profit per plot increased due to the disposal of freehold land at Tonbridge, Kent.
HLM continued to grow its land bank during the year, securing 18 new sites which have the potential to deliver circa 7,212 plots.
Tim Roberts, chief executive officer of Henry Boot, said: “Despite challenging market conditions for our three key markets, our ongoing focus on high quality land and development in prime locations resulted in a resilient performance in 2023. We therefore expect profit before tax for the year to be in line with current market consensus. Furthermore, we have maintained a strong financial position and continued to invest in the business to ensure we are well placed as our markets begin to recover.
“While the housebuilding sector has seen slowing sales rates, our land business is experiencing continued demand for strategic sites with planning in premium locations, as highlighted by the recently announced sale in Swindon, and we continue to selectively grow our land bank. Our development business has performed ahead of expectations, while the investment portfolio is on track to outperform the wider market, helped by the sale of five properties, at an average premium of 23% to December 2022 valuations. The group’s premium housebuilder has also grown, having increased its output by 43% during the year.
“With a path to lower inflation and improved interest rates, whilst there will undoubtedly be bumps along the way, the economy and our markets have turned a corner, but we expect our results for 2024 to be impacted by these factors. We continue to firmly believe that Henry Boot remains well placed to achieve its medium term growth and return objectives.”
