Henry Boot increases dividend amid optimism over UK housing market

Property developer Henry Boot has increased its final dividend as it struck an optimistic tone about the prospects for the UK housing market in 2024.

The Sheffield-based company announced a dividend of 4.4 pence per share on Monday, taking its total dividend for 2023 to 7.33 pence per share, an increase of 10 percent on the previous year.

While the group expects a “slowdown in performance” this year and is cautious about the near-term trading environment, the group “feels the economy has turned a corner” as inflation falls and interest rates “move downwards.”

Therefore, it believes that demand for housing and residential land should increase, as should investor interest in the commercial real estate and buy-to-rent markets.

But the company, which designed and built Pinewood Studios, warned that planning delays and uncertainty “will continue to be an issue” with the upcoming general election bringing even more unpredictability.

Tim Roberts, CEO of Henry Boot, said: ‘We are not immune to the challenges the UK economy poses to the near-term trading environment.’

Last year the company’s construction division saw operating profits fall by almost half to £6.5 million due to a slowdown in construction activity, especially in private residential construction.

It was further affected by subcontractor issues and delays in receiving construction materials for two large-scale projects in Sheffield.

Henry Boot’s total pre-tax profit fell 18 percent to £37.3 million last year, despite revenue growth of 5.3 percent to £359.4 million following strong results from its land promotion and property investment segments.

The former company benefited from the sale of 125 plots at a site in Tonbridge, Kent, to housebuilder Cala Homes, while the latter was boosted by higher sales volumes at subsidiary Stonebridge Homes.

Roberts said: ‘Our focus on prime land, commercial property development and residential development in prime locations has ensured demand for our product has remained resilient.’

Trading conditions in the housing market began to slow in 2022 when the Bank of England raised interest rates several times in a row in response to skyrocketing energy prices, pushing UK inflation to the highest level in around four decades.

Former Prime Minister Liz Truss’s mini-budget subsequently caused a brief collapse in house sales and a major withdrawal of mortgage deals from the market.

Confidence in the property sector remained low for most of last year before recovering in the second half as inflation fell and the BoE ended its rate-tightening cycle.

Shares in Henry Boot Group were 1.1 per cent lower at 182p early on Monday afternoon, meaning they are down around 15 per cent since the start of the year.