Release Date: March 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Henry Boot PLC (LSE:BOOT, Financial) achieved total land and property sales of nearly GBP350 million, demonstrating resilience in challenging market conditions.
- The company has made strategic progress by taking full ownership of Stonebridge Homes and entering into the Origin Joint Venture to accelerate industrial development.
- The balance sheet remains strong with a net asset value (NAV) of over GBP3 per share, reflecting conservative valuation practices.
- The company increased its full-year dividend by 5%, indicating confidence in its key markets and medium-term targets.
- The land portfolio increased to 105,000 plots, with plans to submit applications for 10,000 plots over the next 12 months, capitalizing on changes to the planning system.
Negative Points
- Operating profit in the construction segment was nearly GBP5 million, below budget due to a challenging environment and a fall in HBC's turnover.
- Return on capital employed (ROCE) reduced to 8%, below the target range of 10% to 15%, due to increased cost base.
- Earnings per share decreased to 17.4p, reflecting challenges in the market.
- The construction segment's performance was impacted by a fall in turnover and Banner Plants trading below budget.
- Net debt stood at GBP63 million, with gearing expected to be towards the top of the 10% to 20% range during 2025 as markets improve.
Q & A Highlights
Q: Can you clarify the ROCE target through the cycle and its implications for different divisions?
A: Tim Roberts, CEO, explained that the 10% to 15% ROCE target remains appropriate despite current challenges. Darren Littlewood, CFO, added that Stonebridge is growing and carrying costs for future growth, while the property development segment needs to work hard to achieve desired returns, especially with current market conditions.
Q: Regarding the 10,000 plots planned for Hallam, are there any large schemes included?
A: Tim Roberts, CEO, stated that the plots typically range from 250 to 1,000, averaging around 500. The focus is on a diverse range of applications, and the target is achievable with flexibility to adjust based on market conditions.
Q: How is the demand from housebuilders affecting payment terms, and is there potential for Stonebridge to expand through acquisitions?
A: Darren Littlewood, CFO, noted improving demand and competitive bidding, which could lead to better payment terms. Tim Roberts, CEO, mentioned that while they are open to acquisitions, the current focus is on integrating and scaling Stonebridge.
Q: With the increase in headcount at Hallam, is there a maturity curve to consider?
A: Tim Roberts, CEO, confirmed that the new hires are fully operational, and the focus is on enhancing specializations within the team to improve efficiency and land sales.
Q: Do you expect central costs to continue rising in 2025?
A: Darren Littlewood, CFO, indicated that while there has been investment in technology and systems, wage inflation has stabilized, suggesting that cost increases should be more controlled moving forward.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
