Miller Group offers hope for flagging industry

Published on Wednesday 8 September 2010 22:25

Miller Group offered fresh hope for Britain's recovering housebuilding sector yesterday as it trimmed its losses, flagged potential acquisitions and talked of hiring staff again.

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• Miller Homes Picture: Lesley Martin, Evening News

But the Edinburgh-based company, which was forced to cut hundreds of jobs at the height of the recession, warned it was likely to remain in the red for some time amid "economic uncertainties".

Chief executive Keith Miller said "good progress" had been made in each of the firm's businesses during the last six months.

Accounts for the half year ended 30 June show strong rises in profits at Miller's property development and construction arms, compared to a year earlier.

However, the bottom line continued to be impacted by losses at the core housebuilding business. That left the group nursing a loss before tax of 26.9 million, down on the 33.8m shortfall recorded a year earlier.

On an operating basis, it managed to carve out a modest 200,000 profit, against losses of 5.8m in the first half of 2009.

Commenting on the housing business, which operates across the UK and was hit hard by the economic downturn, Miller said forward sales were running at 90 per cent of the full 2010 target.

He also highlighted a strong housing landbank, equivalent to more than three years' supply. Forward land prospects were described as "very encouraging".

Housebuilders have been keen to maintain strong landbanks during the recession, often buying plots at favourable prices, in the expectation of an upturn in buyer activity.

"A lot depends on how strong the autumn market is," cautioned Miller. "Housing is a big ticket item. There is still a degree of uncertainty around. Confidence will be an issue until we see the outcome of the government's spending review."

Despite the testing backdrop, the group - which ranks as the UK's largest privately-owned housebuilding and construction business - increased its average selling price by 12 per cent to 170,000. This was chiefly down to a change in the product mix, with the firm selling more family houses than flats and less social housing than a year earlier.

Within its commercial property division, Miller said it was "actively seeking new acquisitions for reinvestment".

Finance director John Richards noted that overall occupancy levels had increased to 88 per cent, while the upturn in demand for "high-quality" commercial investments seen in the closing months of 2009 had continued into the first quarter.

During the period, the group, which employs about 1,300 people directly, disposed of the final phase of the Edinburgh Quay office development for some 21.5m.

On the jobs front, Miller told The Scotsman: "There was a lot of change in 2008. (Since then] the headcount has been pretty static, and, if anything, over the next 18 months we are likely to grow the workforce."

Across the group, turnover fell from 404m to 338m.