By most measures, the UK housing market has stagnated over the past year but that hasn’t stopped housebuilder Galliford Try plc (LON:GFRD) from posting a record profit for the first half of its financial year.
House prices fell 2.9% month-on-month in January, according to the latest Halifax House Price Index, while they have risen just 0.8% over the past year.
The Royal Institution of Chartered Surveyors also said recently that the number of homes on the market is drying up and those that are up for sale are struggling to sell.
READ: Help to Buy underpinning new-build boom
But Galliford brushed those statistics aside on Wednesday, reporting a record pre-tax profit of £84.2mln in the six months ended 31 December, a year-on-year rise of 4% (H1 17/18: £81.3mln).
Shares were up 5% to 758p in early deals on Wednesday.
Revenue fell 5% to £1.42bn (H1 17/18: £1.50bn) in the first six months, driven by a dip in volumes and selling prices as Galliford becomes more selective and moves away from London, which has borne most of the Brexit uncertainty.
But that was more than offset by a pick-up in margins, which rose to 19.6% in the period (H1 17/18: 18.5%).
Profit excludes loss from Aberdeen link-road
“Galliford Try has delivered a strong financial and operational performance in the first half, with further progress against our 2021 strategy,” said chief executive Peter Truscott.
“We are seeing good demand, in particular for smaller and mid-range family houses, supported by Help-to-Buy and a strong mortgage market.
He added: “We have seen a positive start to the Spring selling season, despite the headwinds to consumer confidence arising from political uncertainty, which is key to the strength of the market over the coming months.”
Galliford’s pre-tax profit excludes a £26.0mln first-half loss the FTSE 250 firm made on a 58km-long link road it is still building in Aberdeen.
Collapsed construction firm Carillion was one of the original joint venture partners and its demise loaded Galliford with another £150mln or so in costs, forcing the latter to ask investors for more money last spring.
The build has now been completed and the final handover to Transport Scotland is now “in progress”.
No impact if Brexit deal is agreed
Brexit is the word on everybody’s lips at the moment, with just over a month until the UK is supposed to depart from the European Union.
With little still known about what will happen, Galliford, like many UK firms, has already taken precautions.
“We have made specific arrangements where we foresee the potential for disruption to the import of critical materials and products, though noting that it is impractical to try to insulate our business entirely,” read Wednesday’s statement.
Galliford has also hedged the pound should sterling take a dive on March 30 – the first day after the withdrawal.
This is all worst-case though and bosses don’t expect much trouble should the UK leave with a deal in place.
“We consider that a controlled departure under the terms of a withdrawal agreement between the UK and the EU will have no significant direct impact, with supply chains and EU and other overseas labour able to adjust over time as detailed future arrangements become clear.”