Corporate briefing

A digest of company results, news and comment, with BuildInsight views on read-across. Where relevant, links are provided to the prime sources and company websites.

7 Apr The world's two largest cement makers, Lafarge and Holcim, have announced plans for a $55bn "merger of equals". The combined group has combined sales of €32bn and operates in 90 countries with products focussed on cement, quarries, ready-mixed concrete and, to a lesser extent, other building products. The merger, which involves one Holcim (market cap $30bn) share for 1 Lafarge (market cap $25bn) and is forecast to result in €1.4bn in synergies. It is likely to face robust regulatory scrutiny in many countries and the parties envisage disposals equivalent to 10 - 15% of global earnings before interest, depreciation and amortisation (EBITDA).
Insight: it is likely to be slow to be implemented in UK but continues the long run concentration of control in the building materials industry.

6 Mar Balfour Beatty FY results. Revenue rose 2% £10.1bn and underlying PBT fell 32% £187m, "a disappointing financial performance", amid "challenging economic conditions and operational issues in UK construction and a significant downturn in the Australian natural resources sector [Professional Services division]". Order book unchanged at £13.4bn and net debt (excluding PFI) of £66m (2012 cash £35m). Outlook: "We are seeing increasing evidence of improving conditions in some parts of our core US and UK markets, although the long cycle nature of our business means that these will take time to feed through fully in our financial performance."

5 Mar Carillion FY results. Revenue -7% to £4.1bn, PBT -13% to £175m, orders unchanged at £18bn. Underlying operating margin unchanged at 5.6%. Borrowings up from £156m to £215m. Re-scaling of UK Construction division "now complete". Outlook: "conditions to remain challenging in 2014". 

26 Feb Taylor Wimpey FY results. PBT rose 48% to £312.9m. Completions rose by 7.4% to 11696; prices increased by 5.5% to £191,000; and operating margins rose from 11.2% to 13.6%. Year-end net cash stood at £5.4m (2012 £59m debt). On outlook, "the housing market is showing significant recovery". The total order book is up 31%. The group has signalled it would adopt "a more active approach to managing the cycle than has been historically undertaken in the business, or the sector" and that it is "reaching the optimal landbank" for the business. It sees the land market tightening during this year and next. As a result it intends to return over £250m of excess cash to shareholders: £50m in 2014, £200m in 2015 and "further significant" annual payments from 2016 onwards.
Insight: the explicit message on "managing the cycle" may be read as "calling the top", at least on a mid-term timeframe, possibly two to three years hence.

Travis Perkins FY results. Revenue rose 6.3% to £5.2bn, +5.0% lfl. All divisions increased revenue. PBT rose 12% to £321m. Outlook: "The group is well placed to benefit from the upturn in UK building activity and in particular the strength of housing transactions". The only sector that is likely to contract in 2014 is public new build. Debt fell by £104m to £348m and the group plans to increase capital expenditure after a period of retrenchment.
Insight: the merchanting and home improvement group looks likely to continue expanding market share, including new store openings.

25 Feb Persimmon FY results. Underlying PBT rose 49% to £330m. Legal completions were up 16% to 11,528 and the private sales rate in the second half was 39% higher, largely due to the Help to Buy initiative. Average prices rose 4%, largely due to changing geographical and product mix, with underlying prices stable. The operating margin was 16.0% (2013 12.9%) and 16.6% in the second half. During the first eight weeks of this year the private weekly sales rate was 22% ahead of last year and total forward sales at the year end were up 41%. Despite replacing land consumed at 1.54x plots developed, strong cash flow resulted in net cash of £204m being slightly ahead of last year's £201m. This has resulted in an acceleration of £1.9bn Capital Return Programme (being payable to shareholders roughly every two years), with most of the final payment scheduled for 2021 being spread across the intervening years.
Insight: the acceleration of the CRP implies an increasingly bold view of the mid-term market 

24 Feb Bovis Homes FY results. PBT rose 48% to £78.8m; legal completions increased 19% to 2,813. Since the year-end reservations rose by 64%, while house prices were 2% ahead of management's expectations. Two further new regions are planned, taking capacity to 4 - 5,000 units a year. Market conditions: "Homebuyer confidence appears to have improved materially with more positive views on the future direction of house prices, employment and security of earnings.  With this improving backdrop, trading conditions are expected to remain broadly positive during 2014, supporting sales rates and sales prices". Outlook: "higher activity levels and improving house prices are expected to more than compensate for supply chain cost increases." 
Insight: ambitious volume growth planned relative to many peers.

19 Feb Galliford Try H1 results to December. Revenue increased by 18%, and pre-tax profit by the same amount. Housing: units sold by the main Linden Homes unit were virtually unchanged at 1,300, while the average selling price increased by 15%; margins moved up to 13.5% (2013 12.4%). Construction: sales were unchanged at £398m, overall margins slipped to 1.4% (1.8%); margins were up in Infrastructure, and down in Building; orders rose 4% to £1.25bn. Outlook: Housing, significant increase in landbank and significant opportunities in housebuilding; Construction, "the market in the short term remains challenging". The group outlined its strategy to increase both Housing and Construction revenues by 50% by 2018.

Insight:  the new strategy could see the group grow substantially, especially in the area of Affordable Housing, which its "hybrid" model is arguably more suited to than a mainstream volume housebuilder.  

18 Feb Morgan Sindall FY results. Revenue +2% to £2,095m; adjusted PBT -34% to £31.3m; orders +8%. The construction, fit-out and affordable housing group referred to "continued tough market conditions" throughout the year and that margins remain under pressure due to "high competition and increased input costs". Looking ahead, there are "signs of improving conditions" in some of its markets but "upward pressure on supply chain costs and skills availability will provide additional management challenges".

Kier makes surprise announcement that Chief Executive Paul Sheffield will stand down in June. Finance Director Haydn Mursell will take over the role and a new FD is being sought. Trading "remains in line with the board's expectations".

17 Feb Housebuilding and land group Gleeson delivered a 56% increase in home sales to 258 units in the half year to December. Revenues grew 32% to £34.4m while operating profits rose 116% to £2.6m. The group, focused on the north of England, anticipates "further substantial improvements in trading performance and is confident of delivering a result for the full year in line with expectations".
Scottish housebuilder Cala, which is expanding in the south of England, calls in the FT, for rival housebuilders to substantially increase their production. Cala, which was bought from Lloyds in a £210m deal, plans to expand production by 150% over three years.
14 Feb Severfield-Rowen IMS. Trading performance and financial position "continue to be in line with management expectations". A year after the structural steelwork contractor undertook a major review of contracts, following serious losses, UK orders totalled £172m (Feb 13 £209m), a level "with which management is comfortable". The UK market "continues to show signs of improvement". India is "challenging" and will remain so until at least after the May elections.

12 Feb Atkins IMS. Trading and outlook for full year remain in line with expectations. "Good momentum" in UK road and rail businesses, which provide 40% of group revenue. In the Middle East the pipeline of new opportunities remains strong, following earlier contract delays. Stable market conditions in North America and continuing investment in Asia Pacific.   
11 Feb Bellway H1 to Jan IMS. Strong market, helped by consumer demand and mortgage availability "largely driven by Help to Buy". Volumes grew by 15% to 3,245 units, helped by a strong order book in August; growth of over 15% is expected for the full year. Prices increased by 13%, largely driven by London apartments; margins over 15% in H1, further growth in H2 likely. Reservations per site/ week +36% to 0.61. Land spend grew by 65% to £240m.    

10 Feb UK consultant Hyder issues profit warning, with profits for the year expected to be "materially below current market expectations" due to delays in new contract awards in Australia and project delays in the Middle East. Results in the UK are ahead of plan and last year's level, but there was a small loss and a £6m writedown of goodwill on old acquisitions. The shares fell by as much as 26% in early trading.

AIM-listed regeneration and private rented sector specialist Sigma Capital announces its first PRS site acquisition in London. It has signed an agreement with Barking Riverside Ltd, a JV between the Greater London Authority and Bellway to develop 318 apartment homes, including a high percentage of three bedroom family units. The overall delivery cost of the site, construction costs and associated costs are estimated to be in excess of £50m. Sigma expects to start construction towards the end of this year and the site to be built out over approximately 24 months
6 Feb Encouraging read-across for commercial construction and wider property market are contained in the IMS from developer LondonMetric: "for the first time outside of Central London we are beginning to witness some signs of rental growth and improved occupational demand. Regional markets [are] witnessing a resurgence in demand mainly precipitated by UK institutions being priced out of Central London as more foreign investors receive regulatory freedom to invest outside of their home markets. The arrival of non-bank lenders has improved the lending environment by providing competition to traditional bank funding, resulting in better pricing and availability of debt financing from all sources - a key driver for the secondary market." Yields in its core out-of-town and retail distribution sectors fallen by 50 - 100bps over the last 12 months, implying capital growth.

5 Feb Countryside Properties, the South East housebuilder which was taken private by Lloyds at the peak of the boom and bought by Oaktree Capital last year, is to merge with upmarket rival Millgate Developments, FT. The company says this could help propel it into the UK's top 10 housebuilders. Countryside built 1,560 homes last year, at prices between £300k and £600k; Millgate builds around 100, ranging from £600k to £4.7m.
29 Jan McCarthy & Stone has appointed Barratt executive board member and current Mount Anvil CEO as new CEO. The retirement homes specialist was taken private during the last property boom but suffered major losses and underwent a £527m refinancing last year. It is widely expected to be planning an initial public offering. 

28 Jan Crest Nicholson FY results to end-October. Total completions rose 15% to 2,172, with open market completions up 35% to 1,806. The overall selling price increased 12%, partly due to the fall in affordable housing units; no split was given for open market. 600 reservations during the year were taken under Help to Buy. Total sales per site per week rose 34% to 0.90. Turnover + 29%, operating margin 18.5% (2012 18.0%), PBT +40%. Net cash £43m (net debt of £30m). Forward sales +51%. Short-term landbank now 7.5 years. Outlook: "Strong start to 2014. Selling prices will show further increases, driven significantly by product mix, although sales price gains are also being achieved. Constraints on growth are increasingly determined by the supply chain, the shelf-life of mortgage offers and the planning process. Nonetheless, the trading environment is healthy.
Insight: being southern-focused Crest is both benefiting from the stronger market and encountering tougher supply-chain constraints.

Confident Q3 IMS from commercial property group British Land. "Overall, the UK property market had a strong quarter with London strengthening further and domestic and international investment spreading out into the regional markets." In Offices and Retail lfl occupancy rose 0.3% to 97.1%.
Insight: encouraging for the wider commercial sector.

17 Jan T Clarke FY trading statement. Although trading continued in line with management expectations at the end of the period, its assessment of the group's FY results had included "a major contract that is nearing completion where the final settlement remains outstanding". No profit or loss has been recognised on the project and negotiations remain ongoing. Forward orders rose 9% to £250m. Although market conditions "remained tough" during 2013, the group stated "there is more optimism and we are winning assignments on some of the most exciting and prestigious construction projects across the country which is encouraging for 2014 and beyond".
Insight: a setback for the group, which had showed a recovering trend; a sign that payment disputes and delays are a key issue for the industry, especially subcontractors.  

16 Jan Bovis Homes Group FY trading update. "Significant" uplift in PBT expected, in-line with expectations. Total completions +19% to 2,813, including a 26% increase in private units to 2,330. Average selling prices rose 14% £195,100, mainly due to change in mix. Operating margin approaching 15%, from 13.3%. The private forward sales position of 692 is 178% ahead of the opening position in 2013. The group is taking an "assertive" approach to land buying    

15 Jan Taylor Wimpey, FY trading statement. There have been "significant improvements across all of key strategic objectives in line with expectations". Total completions rose 7% to 11,696, of which affordable housing was an unchanged 18%, and the rate of reservations rose 7% to 0.62 per site per week. Private selling prices rose 7%. Order book +11% in volume (6,627 units) and +27% in value. Orders are now "optimal" for "this point in the cycle"; the group is now "approaching optimum scale" and will update "capital allocation approach" for 2014 (ie potential cash return to shareholders) at FY results on 26 February. Help to Buy accounted for 2,900 sales, 30% of private completions.
Insight: another strong trading statement from a housebuilder, but contrasts - possibly controversially, given Help to Buy support - in stating it is nearing an optimal scale.

Potential £2bn initial public offering of UK-based Lafarge-Tarmac JV could be delayed due to Competition Commission ruling that it would force the company to sell one cement plant each, FT. Both groups are appealing.

14 Jan Barratt Developments, trading statement for H1 to end-December. "Strong" performance in half and big hike in the forward order book bodes well for H2. Private sales completions rose 23% to 5,202 and prices on those units rose 11% (the company claims this is due to "reduced incentives and change in mix"). Affordable housing completions fell 11% to 751. Help to Buy accounted for 33% of private completions during the period. Private reservations grew to 37% to 0.67 per site per week. Total forward orders are up 65% in volume and 71% in value. During the period the group approved the purchase of 11,394 plots of land, but said the competitive nature of the market in London and the South East meant it would focus on acquiring land from the public sector and sites which are larger or more technically complex.
Insight: Barratt, the industry's biggest by volume appears to be going for growth more than most rivals.

Balfour Beatty, FY trading statement. Overall trading in continuing businesses was in line with management's expectations. In Professional Services, performance overall was as expected, including Australia where cost reduction measures are mitigating the impact of the continued challenging market conditions. Arbitration on a previously announced contract dispute is well advanced, but settlement is now thought to be achieved in the 2013 results. The year end order book is likely to be broadly in line with the £13.5bn a year earlier.  The order book has been impacted by negative foreign exchange movements, and a continuing shift in the mix in Construction orders from the UK to the US. Performance of the German rail business has worsened since the Q3 Interim Management Statement, primarily due to three complex loss-making contracts. Discussions with a number of potential buyers for the business remain ongoing. Underlying cash performance was in line with expectations with average net debt for the year of £350m, but strong cash performance in December which resulted in an actual net debt balance of under £100m at the year end.
Insight: No major new problems after over a year of major issues with construction and negative cashflow. Dollar weakness out of its hand and German rail problems are on a discontinuing business. Net, just positive but management will hope this is a turning point in sentiment. 
 13 Jan Northern Irish construction and property group Mivan goes into administration having failed to agree to merger terms with local rival Lagan late last year. Administrators Deloitte stated "the business will continue to trade while all options are assessed". Mivan, which also specialises in high-end building and shipping fit-outs, had encountered margin pressures and losses in a number of its international property and construction businesses.

8 Jan Persimmon year-end trading statement: Strong growth in underlying PBT predicted. New house sales +16% for full year, with H2 legal completions 30% higher than H1, due to "substantial" increase in construction in response to demand. Prices +4% due to changing mix in sales of family housing during the year. Further improvement in operating margins anticipated. The value forward sales at the year-end was 41% ahead of the prior year at c.£908m. Affordable homes pre-sold +9% over prior year. Buying plots of land at 1.53x current consumption. The group held cash balances of c.£204m at the year-end (2012 : £201m).
Insight: strong end to year, with H2 likely to be boosted by Help to Buy, and likely further improvement in volumes in 2014.

Galliford Try H1 trading statement: record half year profit anticipated. Housebuilding: 20% increase in sales pipeline; 0.5 unit/site/week (2012, 0.46), prices +16%, reflecting mix, further improvement in margin. Construction: "challenging" market, but opportunities continue to increase; order book +9% at £1.75bn; focus on margin protection; stronger than expected cashflow. Continuing supply chain cost pressures across group, but being well managed.
Insight: encouraging read-across from both divisions, but cost pressures likely to be an industry-wide issue in 2014. Implied cash performance in Construction possibly better than many peers.  
7 Jan Costain year-end trading statement: "continued strong performance" with results to be in line with its expectations plus the £9.1m PFI disposal profit (below). Order book up 25% to £3bn. Over £400m of preferred bidder positions and the level of tendering activity "remains high". Year-end cash position, without quantifying. 
Insight:  the first trading statement of the year from a major construction group points to a continued improving market outlook, at least for biggest groups.

Oldham-based DCT Engineering struggling following cashflow crisis, Construction Enquirer.
Insight: cashflow likely to be major issue across industry in 2014 despite, and possibly because of, the recovery.   

20 Dec Costain disposes of three PFI stakes for a £12m consideration, generating a profit of £9.1m.
Insight: evidence that the secondary PFI market remains active.    

19 Dec Keller: pre-close statement for FY to December for the international ground engineering specialist. "No significant changes" in market or trading conditions since last statement (mid-November), therefore board expects FY results to be in line with market expectations.

US housebuilders' shares strong overnight after relatively benign Fed decision on QE and rates and Lennar reporting 32% jump in earnings and 13% increase in new orders.

Costain wins £100m order to build part of M6.

18 Dec Barratt Developments forms a JV as a parent entity for its three year old alliance with housing association London & Quadrant. This will allow further investment in London and the JV has agreed a five year revolving £120m facility. The alliance has already been involved in four developments of 1,700 units with a gross value of £1.2bn.
17 Dec Trading statement from AIM-listed estate agent Winkworth shows strong transaction levels and prices in its core London area. After a strong first half business has accelerated in the second half, with Q3 sales up 24% y/y, meaning FY revenue is likely to beat expectations. Rentals remain strong. Company expects a similar rise in UK sales transactions in 2014 to the 15% achieved in 2013, close to the record level achieved in 2007. The company forecasts a 5% increase in average prices in central London and the South East next year and a 10% rise in suburban London and it expects the recovery to spread outwards. Help to Buy "has lead to improved sentiment".  

13 Dec Bellway AGM and IMS for 4 months to end-November. Results more heavily skewed to H1 (potential for FY upgrades?). "Strong" trading helped by low interest and high LTV mortgages. Help to Buy accounted for 31% of reservations. Sites up 5% and reservations up 43% y/y.

Morgan Sindall. Another management change, with commercial director Paul Whitmore stepping down. 

11 Dec Carillion pre-close statement for FY to December. Trading "remains broadly in line with expectations". Total group revenue in 2013 to be lower than in 2012, mainly due to the ongoing rescaling of UK construction activities, with the total margin close to that in 2012. UK construction is now at or close to a stable level. Orders stable at around £18bn, despite a reduction of £0.9bn due to structural changes. Services revenue continues to be affected by the previously flagged slow starts to Green Deal and Energy Company Obligation markets, meaning division FY revenue should be slightly lower than that in 2012, with a similar operating margin. Middle East construction revenues likely to be higher, with accelerating pace of contract awards. Non-Mid East construction revenue and margins to be lower than 2012, but still "healthy". Outlook: market conditions "to remain challenging", but selectivity and healthy contract opportunities leaves group well positioned.
Read-across: an indication that UK construction market is stabilising, with growth in Middle East, but impact from poor execution of government Green policies.

6 Dec Berkeley Group H1 results to October: PBT +19% to £169.5m; units sold +19% to 2,294 (including the disposal of 534 from Berkeley's rental fund to M&G Investments) at average price +4.5% to £335,000; gross margin unchanged at 29.3%, but higher overheads bring operating margin down from 21.3% to 20.7%; net cash of £78.9m compared with net debt of £5.5m H1 12. Land spend of £278m to acquire 1,754 plots. Full year guidance: "towards the top of the range of analysts' expectations", due to likely faster than expected completions of the St George's Wharf tower.

28 Nov Wolseley Q1 IMS. Like-for-like group revenue +3.5% y/y: US +7.6%, UK+4.3%, all other regions saw falls. The UK was boosted by housing and RMI and saw 1% inflation. Outlook: "no signs of improvement in market conditions across Continental Europe and we expect trading conditions [there] to remain tough for the foreseeable future".
Read-across: encouraging on housing and RMI markets in UK and US but grim on Europe.

Aim-listed urban regeneration specialist Sigma Capital Group agrees £700m JV with Gatehouse Bank to build up to 6,600 private rented homes. Gatehouse, a London-based Shariah compliant investment bank, will provide equity for the first phase of around 2,000 homes at a cost of approximately £200m and both groups are in negotiations with banks to provide debt funding. The first phase will be built over the next 24 months on land developed in the North West of England by Sigma, which will generate management fees participate in any capital gains from the JV. The JV also provides for the creation of a further 4,600 new privately rented homes, with Gatehouse retaining an option to commit to the equity element of the estimated c.£500m of financing required. PM David Cameron has welcomed the scheme as part of the government's aim of boosting the private rented sector.
Read-across: a significant move in what has been a slow gestation for the potentially huge "Build-to-Rent" sector.

27 Nov Telford Homes H1 results to September: Open market sales 225 (256 last year); gross margins 28.6% (24.3%); PBT £7.7m (£6.5m). The London-based group is 100% sold for this year and has presold 80% and 60% of budget for the next two respectively and is buying land ahead of forecast, following its £20m fund raising in June. Outlook: " very confident of the prospects and growth potential for Telford Homes over the next few years". It said none of its sales to date had involved Help to Buy or any of its predecessors and that all were to owner-occupiers.
Read-across: London apartments market remains strong and strategy underlines competitive land market in the capital. 

26 Nov Structural steel group Severfield-Rowen, which required a rescue rights issues, due to contractual losses, returned to an underlying profit before tax of £1.4m in the first half to September, reversing a £21.1m loss. Non-recurring items, including impairment of its Indian JV, led to a reported loss before tax of £2.7m (£23.6m). The underlying UK operating margin recovered to 2.5% while revenue and the order book both slipped by 3%. “Restructuring complete”. Outlook: “The UK market remains challenging, although there are some signs of it improving into 2014. Even without any upturn in the UK market, we anticipate continuing margin development.

19 Nov Galliford Try Q1 IMS: "encouraging start to the year for both housing and construction divisions"; housing sales and reservations +21% year on year, with prices up by 1-3% and landbank +24%; construction orders +9% and bidding opportunities increasing despite "challenging" market, "strong cash management and margin protection".
Read-across: the hybrid group shows encouraging trends across two divisions, but construction remains "challenging", one presumes mainly at the subcontractor level.

Keller IMS: likely "beat" for full year to December; trading for four months to October continues recent improving trend and orders have increased, despite no significant change in the market; revenue "broadly flat" but efficiencies and good final project results mean margins are better than expected.
Read-across: ground engineering company is largely non-UK; relatively strong orders and margins look more company-specific than market-wide.

WS Atkins: buys 130 strong US specialist consultant Nuclear Safety Associates.

T Clarke IMS: trading in line with expectations but the electrical contractor is "finding it increasingly challenging to agree final accounts promptly" but is taking a "robust" approach to contract negotiations. 

14 Nov Taylor Wimpey Q3 IMS: reservations per site/week + 14% to 0.65; volume of orders +13%; margins up 200 - 300 bps; not explicit on pricing and relatively cautious tone on land buying.
Read-across: warning signals on land prices

WS Atkins H1 results to September: revenue +12%, op profit + 11%, PBT +15%, margins slip from 5.6% to 5.5%; FY outlook "slightly ahead of expectations"; UK strong with revenues +16% and underlying staff growth of 8%; good growth in Energy and Asia Pacific units. 
Read-across: broad based front-end and management consultancy so good signals for wider UK construction

13 Nov Barratt Developments AGM/IMS: "significant improvement" in sales rates across all regions, reservations/site/week up 32% to 0.71; 2,800 reservations from Help to Buy; forward sales +47%; prices up 1.5 - 2.0%, mainly due to reduced incentives; "increased pressure" on materials supplies; 121% increase in plots bought, targeting 4.5 year land bank.
Read-across: continued strong trading for most recognised UK builder

Kier AGM/IMS: trading in-line; Construction division orders of £2.2bn, 100% of budget for year to June, earlier than achieved last year and the availability of new work continues to increase; construction margins in line but public sector payment terms "challenging"; £100m order for Hinkley Point nuclear power station to start next year; Services integrating May Gurney acquisition well and margins in line; Property progressing well and the availability of new work continues to increase.
Read-across: positive signals for wider markets from broadly-based group; Hinkley news (touch wood) a delayed positive for nuclear build sector

Big orders for Balfour Beatty (£213m Denver rail for BB-led JV) and Galliford Try (appointed to £4bn education framework)

12 Nov Former Balfour Beatty Chief Executive Ian Tyler is appointed non-executive Chairman of housebuilder Bovis Homes Group, to success Malcolm Harris. 

11 Nov Redrow AGM/IMS Redrow IMS, covering the 19 weeks from 1 July: Private reservations +52% over last year and prices up 11%. Help to Buy represents 35% of sales. Planning are holding back site openings, says Chairman Steve Morgan.

Hammerson IMS: "improving retailer confidence is generating increased demand for our retail space"
Read-across: positive sign for commercial construction from one of leading retail developers.

8 Nov Bovis Q3 IMS: "traded strongly" and in-line with expectations. Private reservations +45% (+11% sites and rate/site +30%). Prices for year to be at least +10%. Fully sold for the year significantly earlier than in prior years and accelerating site openings.
Read-across: among the more aggressive on volumes among builders 

Balfour Beatty wins £148m of rail contracts in strategically important Singapore market.

7 Nov Morgan Sindall Q3 IMS. FY outlook “in line”, with previously-flagged margin pressure in Construction & Infrastructure. Order book +6% to £3.3bn. No changes in construction markets during Q3, but “as markets recover, upward pressure on material and subcontractor costs will provide additional challenges”. Early indications of market improvements in Fit Out division. Affordable Housing unit boosted by open market sales, but competitive pressures and increasing costs in its construction activities.
Read-across: worrying signals for sector on costs
6 Nov Persimmon Q3 IMS. Visitors were up 20% on the same period a year ago, while the weekly private sales rate was 45% ahead, partly due to slow comparables during the Jubilee and Olympics. Forward sales are up 41% year-on-year. Selling prices “remain firm” across all regional markets and further margin growth is expected for H2. Over 3,000 homes have been sold under the equity loan first phase of Help to Buy, launched this April and only available for new homes. Demand for new homes under the newly-launched mortgage guarantee second phase of Help to Buy (also available for secondhand homes) has been “muted” so far. The company said that phase one will be the preferred choice for housebuilders’ customers, due to its more competitive mortgage rates.
Read-across: first clear signal that builders may be shunning H2B#2

Foxtons Q3 IMS, the first since its IPO in September. Total sales +18% y/y, with property sales +29%, both organically and from seven new London branches.  The group remains confident about prospects for the rest of the year but said it did “not expect to see a significant upturn in London property sales transactions”.  The EBITDA margin for the year so far rose from 33.2% to 36.0%, reflecting the higher revenues and economies of scale, but forecast that Q4 margins would be hit by higher operating costs. For many observers its outlook statement will be surprising: “London transactions have remained relatively flat due to a shortage in the supply of property for sale and low mortgage availability. It remains to be seen whether the Help to Buy initiatives and early signs of a pick-up in mortgage activity ultimately lead to a significant increase in market volumes but these dynamics are expected to materialise slowly".

5 Nov Balfour Beatty Q3 IMS. FY profits likely to exceed expectations, but only because a greater than anticipated gain on PPP disposals will more than offset worse than expected losses in the Australian operations of the Professional Services division. Most other businesses on track, with recovery in the US and UK continuing, but weakness in Australia likely to continue into 2014, due to falling volumes and pricing pressure.

Costain Q3 IMS. Performance "in line with expectations" with a record order book of £3bn, preferred bidder on a further £400m+ and high overall level of tendering activity across the Group's targeted markets. The group remains in net cash despite previously flagged changes in its business dynamics.  

15 Oct Bellway delivers a 34% increase in PBT to £141m for year to July. Volumes: +8% to 5,652; prices +3% to £193k; op margin from 11.4% to 13.6%. Help to Buy supported 29% of reservations since launch in April. Targeting 15% rise in completions in current year.

14 Oct Large and symbolic contract win for Carillion. The services group is chosen, along with Beijing Construction Engineering Group and Greater Manchester Pension Fund to deliver the £800m Airport City commercial and industrial development at Manchester Airport. Argent will be chosen by the JV as development manager for the 5m sq ft urban renewal project within the Enterprise Zone.

8 Oct Ground engineering group Keller buys geotechnical division of the Johannesburg-listed civil engineering and construction company Esorfranki Limited for initial consideration of £31m.

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