Profits drop at Wilson Bowden as margins slip

A SHARP contraction in profit margins on housebuilding was largely behind a 33 per cent drop in Wilson Bowden's interim pre-tax numbers to pounds 10.8m.

However, the decline in margins from 23 to 16 per cent was viewed as creditable by investors, and the shares rose 13p to 239p immediately after the results.

Wilson's interim dividend is being held at 2.5p, still comfortably covered by earnings per share of 8.9p, down from 13.6p.

The six months to 30 June were also marked by a sharp swing in the housebuilding aspirations of Wilson's directors.

David Wilson, chairman and chief executive, said: 'We did intend to build 1,600 units this year, but that was blitzed by the election. We would not be unhappy if we matched last year's 1,300.'

Profit margins were mainly affected by a drop in the average selling price of a Wilson home from pounds 80,000 to pounds 75,700. Wilson sold 643 houses in the half-year, against 650 last time.

'Our policy continues to be to optimise margins. We can't sell a house for nominally more than it's worth, so we are not dragging ourselves into the volume business world,' Mr Wilson said.

Wilson's big emphasis, he added, 'was looking after the balance sheet, and taking advantage of laying foundations for the future'. The land bank has been increased by 30 per cent through the purchase of 1,900 plots.

'We feel that land is something that one does not stop buying. Land owners are taking the view that they do not see quick increases in value. It has taken a long time to dawn on them.'

On that note, Wilson is expanding in the Home Counties, round the M25 from Watford, through Chelmsford to Maidstone.