Housebuilder Telford Homes has assured it remains “firmly on track” for higher annual earnings despite posting a fall in half-year profits and sales.
The London-focused developer reported a 3.3% drop in pre-tax profits to £8.7 million for the six months to September 30 after being hit by the timing of contracts.
But it said it was “well positioned” to meet City expectations for full-year profits of more than £40 million, up from £34.1 million the previous year.
Jon Di-Stefano, chief executive of Telford Homes, said: “Telford Homes is firmly on track to deliver profit before tax in excess of £40 million for the year to 31 March 2018, in line with market expectations, having secured over 95% of anticipated gross profit.”
Revenues fell nearly 5% to £99.3 million as its results confirmed the previously flagged impact of lower income from construction contracts, in particular affordable housing, due to the timing of contracts starting and finishing.
Telford is expanding further into the build-to-rent sector, where profit is booked at the start rather than at the end of the development.
The group added: “There is a growing realisation from Londoners that renting rather than buying is not as undesirable as some make it out to be and the proportion of tenants versus owner-occupiers will continue to increase in the coming years mirroring the situation in many other cities globally.”
Telford reiterated that Brexit uncertainty and tax changes were knocking demand for higher priced homes in London, but said this continues to be offset by an ongoing shortage of homes in the capital.
The group said it has more than £1.4 billion of revenues in the pipeline, or 4,200 homes, while forward sales stand at more than £580 million.
Investors shrugged off the half-year results, with shares rising more than 1%.
Analyst Robin Hardy at Shore Capital praised a set of “solid interims and a positive outlook from Telford Homes”.