Galliford puts housebuilding on a four-day week
By Robert Cookson and Maggie Urry
Published: January 12 2009 08:36 | Last updated: January 12 2009 19:09
Staff at Galliford Try’s struggling housebuilding business have been put on a four-day week to save cash and avoid additional job cuts.The construction group, which also warned it expected to halve its interim dividend, has cut 340 workers in its housebuilding business over the past 12 months, or 43 per cent of the division, as the property market crumbles..
Greg Fitzgerald, chief executive, said: “By reducing people down to a four-day week it has meant we’ve not shut any offices and we’ve basically kept the fabric of the division intact. I think we’re the first housebuilder to do so, but we won’t be the last.”
The company said the housing market remained “extremely difficult”, with recent trading in line with market expectations.Mr Fitzgerald said cutting the dividend would give the group extra cash to take advantage of opportunities such as distressed land sales, or even sales of companies. He predicted that when the housebuilding recovery eventually comes, Galliford would be higher up the league table for UK housebuilders than its current eighth place.
Last year Galliford paid an interim dividend of 0.9p and a total distribution of 3p. Larger rivals Persimmon and Bovis last week said they were scrapping final dividend payments and restructuring their finances as the downturn in housing showed no sign of abating.
Unlike most of its peers, Galliford is not heavily indebted. At December 31 the group had net cash of more than £1m, compared with net debt of £47m a year earlier. The company completed 964 new homes during the six months to December 31, down from 1,174 in the same period a year earlier. The average selling price dropped to £171,000 compared with £203,000 a year ago.
Mr Fitzgerald said there were tentative signs that investors were coming back into the market to buy homes to let. “We are getting investors we haven’t seen for six or seven months,” he said, attributing the demand to low interest rates and increased risk appetite.
Some of Galliford’s flats have fallen in price by more than 40 per cent from the peak. The company expects to write down the value of its land by about £50m when it publishes interim results on February 19.
Galliford’s profits have held up better than pure housebuilders thanks to its construction business, which is largely for the public sector and regulated industries. Last week it won a contract with Scottish Water.
The contracting order book stood at £1.7bn at the end of December, of which 91 per cent was for the public and regulated sectors. The company said it had secured 93 per cent of anticipated revenues for the financial year to June. The shares dipped ¾p to 35¾p.
Copyright The Financial Times Limited 2009