Profits plunge at Wilson Connolly

Wilson Connolly confirmed the dire state of the house-building market last year with a plunge in sales and profits from its mass-market housing operation, which sells three and four-bedroom houses for about pounds 60,000, writes Tom Stevenson. The fall in profits from pounds 38.2m to pounds 22.5m was well below expectations in the City and the shares tumbled 12p to 162p.

Lynn Wilson, chairman, said: "The recovery in the housing market since 1992 gave hope that the worst of the recession was over. Sadly 1995 was yet another false dawn: continuing job insecurity, reductions in mortgage tax relief and the lack of fiscal support for the housing market have all impacted on fragile consumer confidence."

Turnover at the Midlands-based housebuilder collapsed from pounds 316m to pounds 245m as the number of completions fell to 3,870 from 1994's 4,200. Analysts had been expecting a maintained level of completions last year, but the company said it had difficulties getting planning consent for enough sites following a tightening of the planning regime.

In order to push sales, and because the group continued to eschew the incentives other housebuilders increasingly offer to tempt buyers, the group was forced to cut prices. The average selling price actually rose from pounds 58,000 to pounds 59,600, but only because there was an increase in the number of higher priced three and four-bedroom houses in the sales mix.

The gloomy news from Wilson Connolly, one of the industry's more highly regarded companies, follows disappointing announcements from other builders including Beazer, earlier this week, and Tarmac, which recently decided to pull out of new house-building altogether, swapping its assets for Wimpey's construction and minerals operations.

According to Wilson, the changes in the structure of the housing market in recent years are unparalleled for several decades: "The metamorphosis cannot be measured on an annual basis but will result in a small group of highly professional housing developers, of which we shall be a part."

Investment column, page 24