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| Version 4 | Version 5 |
|---|---|
| More job cuts at UK housebuilders | More job cuts at UK housebuilders |
| (17 minutes later) | |
| Bovis Homes and Redrow have become the latest UK housebuilders to announce a sweeping reduction in their workforces. | Bovis Homes and Redrow have become the latest UK housebuilders to announce a sweeping reduction in their workforces. |
| Staff numbers will be cut by 40% compared with the beginning of the year at both firms. | Staff numbers will be cut by 40% compared with the beginning of the year at both firms. |
| A credit crunch and drop in the number of affordable mortgages are to blame for the market problems, they said. | A credit crunch and drop in the number of affordable mortgages are to blame for the market problems, they said. |
| Bovis said it would shed about 400 office and site-based jobs, while Redrow said that some 550 jobs will go as part of broad cost-cutting measures. | Bovis said it would shed about 400 office and site-based jobs, while Redrow said that some 550 jobs will go as part of broad cost-cutting measures. |
| Low confidence | Low confidence |
| The whole property industry is reeling from low homebuyer confidence. | The whole property industry is reeling from low homebuyer confidence. |
| Managements are switching their focus from profits to cashflow Keith Bowman, analyst, Hargreaves Lansdown Housebuilder shares rise | Managements are switching their focus from profits to cashflow Keith Bowman, analyst, Hargreaves Lansdown Housebuilder shares rise |
| Persimmon, Taylor Wimpey and Barratt Developments have all announced job cuts and warned on the outlook for the housing market for 2008. | Persimmon, Taylor Wimpey and Barratt Developments have all announced job cuts and warned on the outlook for the housing market for 2008. |
| "Sales revenues have taken a dramatic downturn, whilst the overall financial picture is further complicated by the need for just about all the builders to write down the value of previously purchased land," said Keith Bowman, an analyst at Hargreaves Lansdown stockbrokers. | "Sales revenues have taken a dramatic downturn, whilst the overall financial picture is further complicated by the need for just about all the builders to write down the value of previously purchased land," said Keith Bowman, an analyst at Hargreaves Lansdown stockbrokers. |
| "Banking covenants are now coming dangerously close to being breached and managements across the board are switching their focus from profits to cashflow - heightening investor concerns that the fight has now become one of survival," he added. | "Banking covenants are now coming dangerously close to being breached and managements across the board are switching their focus from profits to cashflow - heightening investor concerns that the fight has now become one of survival," he added. |
| But the stock market welcomed the news from Redrow and Bovis, which show that the companies are taking serious action to minimise their losses. | |
| In late afternoon trade, Bovis Homes shares rose 5.3 pence, or 1.7% to 322.8p, while shares in Redrow gained almost 6% to trade at 102p. Redrow shares rose as high as 14% earlier in the session but erased some of those gains. | |
| 'Worst for years' | 'Worst for years' |
| Bovis said the market for selling homes was the "worst that the group has seen for years", while Redrow called the sharp decline "unprecedented". | Bovis said the market for selling homes was the "worst that the group has seen for years", while Redrow called the sharp decline "unprecedented". |
| Sales completions at Bovis for the six months to the end of June were down 32%. | Sales completions at Bovis for the six months to the end of June were down 32%. |
| Of the homes that were completed, 27% was social housing, rather than private homes, more than double the amount in the same period last year. | Of the homes that were completed, 27% was social housing, rather than private homes, more than double the amount in the same period last year. |
| Bovis said it would continue to seek opportunities in social housing as it expects private home sales to remain low for the rest of 2008. | Bovis said it would continue to seek opportunities in social housing as it expects private home sales to remain low for the rest of 2008. |
| As part of its cost-saving drive, Bovis said it was closing one of its offices and merging a number of key functions of its northern region with its central region. | As part of its cost-saving drive, Bovis said it was closing one of its offices and merging a number of key functions of its northern region with its central region. |
| It will also cut its interim dividend to 5 pence per share. The company said that it had expected to pay shareholders a dividend of 20p per share. | It will also cut its interim dividend to 5 pence per share. The company said that it had expected to pay shareholders a dividend of 20p per share. |
| Redrow is also making moves to manage its cost base, closing two of its 10 offices. | Redrow is also making moves to manage its cost base, closing two of its 10 offices. |
| It is carrying out a review of the value of inventory and land not in development. It warned that this review may lead to it cutting the value of its holdings. | It is carrying out a review of the value of inventory and land not in development. It warned that this review may lead to it cutting the value of its holdings. |
| Both Redrow and Bovis were pessimistic about the short-term outlook for the property market. | Both Redrow and Bovis were pessimistic about the short-term outlook for the property market. |
| Earlier on Wednesday, Redrow had said that as many as 850 jobs would go as part of its cost cutting measures. The company later clarified its position. | Earlier on Wednesday, Redrow had said that as many as 850 jobs would go as part of its cost cutting measures. The company later clarified its position. |
| Do you work for either firm? Will you be affected by the job cuts? Send your comments using the post form below, or text 61124: | Do you work for either firm? Will you be affected by the job cuts? Send your comments using the post form below, or text 61124: |