STEWART Milne Group has revealed its ‘strongest ever’ level of forward sales and predicted ‘greatly improved’ trading and profits for the year ahead.
The housebuilder and offsite timber systems manufacturer revealed that the Covid-19 pandemic, restructuring activities and the review of its land bank ‘significantly impacted’ on trading in period ending October 2020.
However, in the latter part of 2020, Stewart Milne Homes saw ‘positive’ trading performance, with sales ‘significantly ahead’ of last year across all regions.
With reservations secured for over 70% of the new homes planned in 2021 and, following a strategy review, Stewart Milne Homes is now described as being ‘on track’ to boost profits this year.
Stewart Milne Timber Systems is also experiencing growth, with a current forward order book of over £200 million. The group attributed this to product and manufacturing innovation and capacity to meet future demand nationally for offsite construction. Increased volumes have led to the creation of a third production facility in central Scotland.
Stuart MacGregor, CEO of Stewart Milne Group, said, “The rapidly-rising demand for modern methods of construction, along with our focus on building high value, high growth, long term partnerships with our housebuilder customers provides us with confidence for the continued growth of the timber systems business as the market normalises.
“We’re also seeing record levels of sales demand for our homes with the strongest forward sales position in our history. There is unprecedented demand for quality, family homes in suburban and rural locations, where a strong sense of community and more space have become more of a priority. This is an extremely strong trend which plays very well to our traditional strengths which are underpinned by our product designs and our differentiated approach to place making.
“The major steps we’ve taken to improve profitability and competitiveness and bolster our position in the regions where we see the strongest demand and greatest growth potential, underline our confidence in the next five years.”
The group said it is lodging ‘historic’ accounts for the 16-month period 1st July 2018 to 30th October 2019, after a change to the group’s financial year end.
Having delivered ‘strong’ turnover and profit growth in 2017 and 2018, the business revealed the figures for the year to October 2019 were ‘adversely impacted by poor market conditions’ in the north east of Scotland and exceptional items of £43 million as a result of five years of an oil and gas downturn.
The accounts show a turnover of almost £379 million with operating profits of £7.2 million. After the revaluation of assets, the group showed an operating loss, post-exceptional items, of £36 million for the year to October 2019.
Finance director Fraser Park added, “These historic 2019 accounts and the Covid impacted 2020 performance, mark a transitional period for us, clearing the way for fundamental changes that are making us more competitive and more profitable. These include a review of our cost base, the introduction of an entire new housing range, an accelerated build strategy and greater efficiencies driven by adopting digitalisation.
“We changed our year end to move away from peak periods of sales activity and our business planning cycle. Our 2019 accounts cover a 16-month period and includes the four months from July to October which are typically loss-making due to our sales cycle of quieter summer months.
“In this period, we achieved strong growth in central Scotland and maintained volume in north west England. However, the poor market conditions in Aberdeen and Aberdeenshire, during one of the deepest and most protracted oil and gas recessions, had a major bearing on sales and profits. We took the decision to revalue our land bank in this region to allow for a permanent reduction in land values and associated sales pricing. This, along with a subsequent restructuring will result in profitable trading in our homes businesses from the 2021 financial year.”
