There was more woe for the housebuilding industry on Wednesday, as two firms announced the latest bad news from the stricken industry.
National construction firm Rok said it expected a “significant deterioration” in revenue from work including social housing operations, which had previously been relatively safe work.
And housebuilder Redrow said reservations had nearly halved in the last few months alone, in what the firm described as an “extremely fragile” market.Rok – which describes itself as “the nation’s local builder” – said: “Although the group has been scaling back its contracting operations to focus on repairs, refurbishment and response maintenance, the duration of Rok’s projects is considerably shorter than for many in the sector and therefore the impact has been far more rapid It also said it had been forced to turn away a number of jobs where it doubts customers’ ability to pay or margins were lower than expected, which had hit revenue further.
It had previously said its strong order book made it a safe prospect but yesterday admitted its list of contacts was worth only £470 million, compared with £600 million at the end of June.
The Exeter-based firm is cutting 750 jobs as it accelerates cost-cutting plans after a sharp slump in business last month.
It said projects worth more than £150 million had been shelved or cancelled by public and private clients following the banking crisis.
The firm was already planning to shed 350 roles but will cut an extra 400 staff as part of efforts to save a further £20 million.
Profits will be £12 million lower than expected as revenues fall by about £120 million, the firm said. An industry analyst from Numis Securities said: “Rok’s update is clearly disappointing given the scale and speed at which the local market has turned down, and the public sector aspect of this is obviously an area upon which the market will focus.”
Welsh firm Redrow said it had sold an average of 38 houses a week over the past two months. This was actually a small seasonal rise in figures but the group said it was braced for conditions to remain difficult as borrowers struggle to secure home loans.
“The sales market remains extremely fragile and the outlook for 2009 is very weak with mortgage availability still limited,” a spokesman said.“There is increasing concern about the prospects for the economy with expectations of rising unemployment likely to impact confidence – the degree to which this will affect pricing and margins is uncertain.”
Redrow has slashed its workforce by 40 per cent over the past year, refinancing its debt and cutting land buying and construction activity.
The firm slumped to a loss of £193.9 million in the year ending June 30, hit largely by a £259.4 million writedown on plummeting land values.