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Henry Boot warns 2024 performance will miss current consensus

(Sharecast News) - Land, property and construction company Henry Boot reported a mixed full-year performance in an update on Tuesday, with profit before tax for 2023 set to align with market consensus, although its outlook for 2024 was much less optimistic. The London-listed firm said it focussed on investing in its prime land portfolio throughout 2023, expanding its development programme, and growing its housebuilder Stonebridge Homes.

It said those strategic efforts led to an increase in net debt to £77m, although it added that it maintained a strong financial position.

Hallam Land Management (HLM) reported a decrease in plots sold in 2023 but an increase in profit per plot due to strategic land disposal.

Demand for premium sites remained strong, with a significant sale in Swindon contracted for completion in phases by 2026.

Henry Boot Developments (HBD) exceeded expectations in 2023, with completed schemes reaching a gross development value (GDV) of £126m.

The company said it had a robust committed development programme and a near-term pipeline of occupier-led schemes.

Henry Boot said its investment portfolio increased to £113m in 2023, while Stonebridge Homes showed significant growth, with a focus on premium homes in prime locations.

The construction segment, represented by Henry Boot Construction (HBC), faced challenges in 2023, but the board said it started 2024 with 46% of its order book secured.

Despite economic optimism, Henry Boot anticipated a performance lag in 2024, leading to projected profitability significantly below market consensus.

"Despite challenging market conditions for our three key markets, our ongoing focus on high quality land and development in prime locations resulted in a resilient performance in 2023," said chief executive officer Tim Roberts.

"We therefore expect profit before tax for the year to be in line with current market consensus.

"Furthermore, we have maintained a strong financial position and continued to invest in the business to ensure we are well placed as our markets begin to recover."

Roberts said that while the housebuilding sector had seen slowing sales rates, the firm's land business was experiencing continued demand for strategic sites with planning in premium locations, as highlighted by the recently-announced sale in Swindon, as it continued to selectively grow its land bank.

"Our development business has performed ahead of expectations, while the investment portfolio is on track to outperform the wider market, helped by the sale of five properties, at an average premium of 23% to December 2022 valuations.

"The group's premium housebuilder has also grown, having increased its output by 43% during the year.

"With a path to lower inflation and improved interest rates, whilst there will undoubtedly be bumps along the way, the economy and our markets have turned a corner, but we expect our results for 2024 to be impacted by these factors."

At 0818 GMT, shares in Henry Boot were down 8.19% at 192.8p.

Reporting by Josh White for Sharecast.com.

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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