Wilson Bowden builds up profits

HOMEBUILDER Wilson Bowden has posted a sharp rise in profits despite warning of increased nervousness among buyers. The residential property developer said viewings and reservations plummeted during 2004, and warned that completing sales had become more challenging.

The UK's fifth-largest homebuilder said the slowdown was reflected in its lower forward order book going into the first half of the year.

The shares dropped 15p in early morning trading to 1223p even though the firm posted a 16% rise in underlying pre-tax profits to £260.5m. The figure was towards the top of analysts' forecasts of between £250m and £260.5m.

Even though the company said business had shown signs of fresh life in 2005, its outlook was more cautious than the recent statements from competitors Persimmon and George Wimpey.

Group chairman David Wilson said: Following much public speculation on the sustainability of house prices, coupled with five interest rate rises between November 2003 and August 2004, we saw a significantly more cautious attitude on the part of buyers from around the middle of the year.

'Sales were slower and more difficult to bring to a conclusion, and the nervousness of buyers was evident both in visitor and reservation numbers.'

Wilson added that the company adopted a more cautious approach to buying land in the latter half of 2004 due to the nervousness in the market.

Headline selling prices softened in the second half of the year, up by 1.1% to £206,000. Even so, the group is on course to deliver nearly 6,000 housing completions in 2004.

Wilson Bowden anticipates that it will have at least 12% more active sales sites during 2005, while it also expects to see a modest reduction in the average home size to reflect the change in market demand.

The company increased dividend payments by 15.8% to 38p per share.