Bovis beats first-half forecasts as profits double - UPDATE

Bovis Homes saw shares rise on Monday morning after it doubled its profits in the first half, well ahead of brokers' forecasts.

Pre-tax profits in the six months to June 30th were up 100% from £8.1m to £16.2m. Peel Hunt was expecting a figure closer to £14.6m, while Panmure Gordon had pencilled in just £12.5m.

The first-half beat led Panmure to raise its full-year forecast from £47.6m to £51.3m. "Whilst our recommendation remains 'hold' on valuation grounds, it is clear that the group is making strong progress against a stable market backdrop," Panmure said.

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The operating margin improved by 2.8 percentage points from 7.5% to 10.3% year-on-year, 30 basis points ahead of Panmure's estimate.

Meanwhile, Bovis said that it was raising its interim dividend per share to 3.0p, double the payout of 1.5p paid for the first half of last year.

Revenues gained 27% from £133.6m to £170.3m, as legal completions improved 18% from 801 homes to 944 homes with an average sales price of £164,400, up from £163,400 in the same period the year before.

"The Group has delivered a strong performance during the first half of 2012 with profit before tax doubling against the backdrop of stable, but challenging, market conditions. This increase has been delivered through the compound positive effect of increased volumes, improved average sales price and stronger profit margins," said Chief Executive David Ritchie.

"As a result of a greater number of active sales outlets with an increasing proportion of new, more profitable sites, the Group's profits will, subject to stable market conditions, continue to increase significantly in the second half of 2012, in line with the Group's expectations," he said.

While financial figures provided a beat, the pre-close trading update last month meant that the group's operating performance in the first half didn't come as a surprise today.

Investec reiterated its 'buy' rating on the stock, saying: "For us, the positive factor this morning is the tone of the statement, with strong margins driving a doubling of profit before tax for 1H, in turn leading to a doubling of the interim dividend, and comments on current trading supporting a view that this strong trading can be sustained."

By 11:00, shares were up 1.76% at 501.66p.