London-focused residential property developer Telford Homes plc (LON:TEF) said half-year profits will be up year-on-year but down on the preceding six months.
Telford is targeting £50 million of profit before tax for the year to 31 March 2019 and sees no reason at this point of lowering that target, although if the market worsens as Brexit approaches it may be obliged to do so, it cautioned.
The company said it that while there has been a well-publicised downturn at the top end of the London market, things are not so bad in more affordable locations – in London “more affordable” apparently equates to an average price point of around £540,000, according to Telford.
Telford Homes: Expects fewer completions in H1 than H2, profits also lower, but up vs prior year. No reason to change targets, assuming market doesn’t worsen as Brexit approaches.
— Mike van Dulken (@Accendo_Mike) October 10, 2018
The builder said it has continued to achieve sales at a consistent rate in the last few months, particularly where the homes are priced under £600,000 on developments that are either complete or nearly complete. These sales are predominantly to owner-occupiers and a significant proportion of them are using 'Help to Buy'.
The sale of homes priced above £600,000 has become “more challenging”.
Based on Telford’s experience, the practice of buying a London home purely as an investment is in obeisance.
"Our key objective is to fulfil the ongoing demand for the homes that London needs. Notwithstanding the uncertainty surrounding the outcome of Brexit, the group continues to perform well and is focused on increasing the scale of the business driven by the need for homes at affordable price points, in particular in the rental sector,” said Jon Di-Stefano, the chief executive officer of Telford Homes.
“We remain confident that our approach to forward sales with increased visibility over profit recognition enhanced by our success in build to rent will enable us to deliver strong long-term returns to our shareholders," he added.
The shares slumped 13.6% to 340.5p in early deals.