Bovis takes £7 million hit after admitting decline in customer service standards
Profits at housebuilder Bovis Homes fell last year with the firm taking a £7 million hit linked to "significant" customer complaints over the poor quality of its homes.
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The Kent-based group said pre-tax profits in the year to December 31 fell 3% to £154.7 million, below expectations.
Bovis admitted customer service standards "fell significantly" during 2016 after being dogged by complaints over homes that were sold unfinished and had electrical and plumbing faults.
It said: "Our customer service standards have been declining for some time and combined with the delays to production towards the year end, we have entered 2017 with a high level of customer service issues.
"Our customer service proposition has failed to ensure that all of our customers receive the expected high standard of care."
The £7 million provision will cover remedial work and compensation for affected customers and Bovis has announced a raft of measures to improve service.
This includes more staff to deal with complaints, the creation of a dedicated homebuyers' panel and an improved quality assurance process.
Shares fell by 10% in lunchtime trading off the back of the news.
Bovis also said that it would slow the rate at which it builds homes in 2017 as part of a "re-set" after a "difficult" 12 months.
"We are slowing our rate of production and targeting completion volumes for 2017 to be circa 10% to 15% below the 2016 level, before a return to normal industry production levels," it said.
Nevertheless, revenue rose 11% to £1.1 billion last year with completions up 1% to 3,977.
Interim chief executive Earl Sibley said: "We have a clear set of operational priorities for 2017 and are fully committed to improving our levels of customer service and delivering high quality homes this year and in the future.
"The fundamentals of the business remain strong with a robust financial position and high quality land bank."
In January David Ritchie stepped down as chief executive after eight years in the role, weeks after warning over profits.
George Salmon, equity analyst at Hargreaves Lansdown, said: "The sooner the group can find the right person to take the reins permanently, the better.
"While Bovis has its own issues to deal with, a chunky 10% increase in average prices and continued strong demand from buyers show the sector as a whole is proving resilient despite fears over the effect of the UK's withdrawal from the EU, though it is still of course early days in this process."