Bovis Homes cuts more jobs as slump deepens

Housebuilder Bovis Homes warned today that sales for this year had slumped by nearly half and announced plans to cut another 200 jobs.

Forward sales at January 1 stood 48 per cent below the previous year at 425 - although it saw no further deterioration in 2008 trading since its last update two months ago.

Bovis employed around 1,000 staff a year ago and has already shed 400 jobs. The second wave of cuts will take headcount 60 per cent below the beginning of 2008, the group said - representing a further 200 redundancies.

The housebuilder, based in Longfield, Kent, is weathering the market slump through other cash-saving moves such as cutting the final dividend.

In late December the firm renewed its banking facilities, which shores up its finances until March 2011.

But the firm said the current condition of the housing market and wider economy appeared "challenging", with little impact from the Bank of England's drastic rate cuts.

"Confidence is low, bad news predominates, and corrective economic actions which have worked historically have not yet seen a positive response," Bovis said.

Despite the tough conditions, the firm is in a stronger position than more heavily-borrowed rivals like Barratt Developments and Taylor Wimpey.

Although its new bank facilities are more expensive, Bovis said its low debts and focus on cash generation put it in a better condition to capitalise on a recovery.

"Interest rates are likely to remain low and with lower house prices, affordability will improve," it said.

"When consumer confidence returns, the low levels of current housebuilding across the country will accentuate the well-publicised supply and demand dynamic in the UK housing market."

Bovis completed 1,817 homes during 2008 compared with 2,930 the year before, in line with its expectations.

But the average sale price slid from £179,500 to £150,000 as the firm built a greater proportion of cheaper social housing.

The company currently owns enough land with residential planning consent for around seven years of development, although it will make a writedown in its March results to reflect falling land values.

Panmure Gordon analyst Hugh Rich said Bovis had delivered a "mixed" update.

"Whilst trading is in line with expectations, the performance on debt is significantly better than we had been looking for.

"However, news that the business will not pay a final dividend is disappointing, particularly as there appears to be little cash constraint at the business," he said.

* Almost 200 jobs were under threat at paving stone maker Marshalls today after the firm launched its latest cost-cutting drive to cope with "uncertain" markets.

The firm is considering the closure of two concrete plants at Llay in North Wales and Hambrook in West Sussex, potentially hitting 135 staff.

A further 55 jobs could go as the Huddersfield company slashes costs at its consumer arm, which designs and installs features such as patios and driveways.

Last year Marshalls cut 140 staff with the closure of concrete manufacturing bases at Cannock, Staffordshire, and Sawley in Nottinghamshire.