Scottish housebuilder says it has made 拢3m of savings in wake of market conditions
Pre-tax profit at listed Scottish housebuilder Springfield fell by 5% in the first half of its financial year despite soaring turnover as it weathered rising construction costs and reduced buyer confidence.
The housebuilder, which recorded turnover growth of 85% in the six months to 30 November on the back of major acquisitions in 2021, said its pre-tax profit had nevertheless slipped to 拢5.9m, from 拢6.2m the previous year.
Springfield reported total revenue of 拢162m, up from 拢87.3m in 2021, with private housing turnover soaring by 151% to 拢119m. It built 673 homes, its highest ever half year figure, up from 459 in the same period in 2021.
However, the housebuilder, which issued a profit warning in December in the face of the increasingly challenging market conditions, said margins had been impacted both by rising costs and the decision of the Scottish government to cap private rents, which had caused it to pause its planned expansion into the build to rent sector.
Last year Springfield also decided to stop taking on new affordable housing contracts in the wake of rising build costs, which saw its affordable housing turnover for the period drop 12% to 拢28m despite the expanding size of the business overall.
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The firm today said it had responded to the market conditions by making 鈥渁nnualised cost savings of approximately 拢3m鈥� in the business by reducing its 鈥渇ixed cost base鈥�, though it did not detail where savings were being made and whether that included redundancies.
Innes Smith, chief executive officer of Springfield, said it had been a 鈥渃hallenging period鈥� for the housebuilding industry which had faced 鈥渟ignificant headwinds鈥�.
He added: 鈥淭he UK government鈥檚 mini-Budget in September reduced the confidence of homebuyers and the cost of mortgages increased significantly,鈥� he said. 鈥淥ur affordable housing business was greatly impacted by build cost inflation and, with the Scottish Government still to review its affordable housing investment benchmark, it is not currently possible to continue building affordable homes at the same pace as we have in the past.
鈥淧lus, while one land sale to a housebuilder was achieved, the industry-wide stalling of land purchases meant that we could not secure acceptable value for additional sales.鈥�
He added that the 鈥渇oundations鈥� of Springfield remained strong and the business was focused on reducing its 拢74m net debt position. Springfield built up debt with the purchases of Mactaggart & Mickel and Tulloch Homes in 2021.
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