Market conditions were more favourable than they had been for 10 years.After being stung by the 1990s property slump, the group has fought hard to reduce its exposure to cyclical swings in the property market. Whereas large-scale building projects made up 85 per cent of its business in 1987, this has now been reduced to 60 per cent.Travis Perkins, the timber and builders' merchant, said it expected housing sales to be subdued under current market conditions. The average price was now pounds 107,000.Amec's engineering operations saw a return to profitability at its manufacturing operations in Newcastle. Shares rose yesterday by 15p to 261.5p.Amec, the construction and engineering group, reported a rise in profits of 26 per cent to pounds 47.5m, including a doubling of earnings at its house building subsidiary, Fairclough Homes.Amec said Fairclough had benefited from a buoyant marketplace for property in the South-east where prices for its homes had risen by 24 per cent over 1997. Its casualwear and underwear division lifted pre-exceptional profit to pounds 14.0m in 1997 from pounds 11.6m in 1996.
The company set a return on average capital employed target of 17 per cent to be achieved in the year ending December 1999.- Reuter. HOUSE BUILDERS and construction companies yesterday reported much- improved profits but warned that higher interest rates could damage the recovery in sales. Bovis, the British housebuilder, saw its profits rise by 60 per cent in its first year as a separately listed company. But Malcolm Harris, the group's chief executive, warned interest rates must not rise if the market was to continue to expand. "The reduction in retail sales last month and the very high pound, means that in our view there is no need whatsoever that interest rates should rise," he said. "In fact we would hope over the next two years they should moderate as we see an alignment of European rates."Mr Harris said the group nevertheless planned significant expansion in the north of England. It has doubled the size of its land holdings in big northern provincial towns. "The prime areas of the Midlands and the North are showing an element of catching up in terms of price increases," he said.Bovis now holds a total of 2,200 acres of land, giving it the potential to build over 13,000 homes.
Its average home sold for pounds 92,600 in 1997, up slightly from pounds 90,100 in the previous year.Bovis, which last December was spun off from its former parent, P&O, reported profits of pounds 37.3m, up from pounds 23.2m last year. Our order books did not suffer too badly and we are beginning to see better margins," said Mr Dyer.The Asia-Pacific region makes up just 5 per cent of group sales, which increased by pounds 6m to pounds 932.3m at constant exchange rates in 1997. About pounds 310m of the group's turnover came from sales to Marks & Spencer.The company's lace and stretch fabrics division recovered strongly in 1997 to post pre-exceptional profits of pounds 19.2m, up from pounds 12.9m, helped by buoyant demand in the United States and Europe.The group's lingerie and hosiery division saw a slight fall in pre-exceptional profit to pounds 11.4m in 1997. The shares were booted down 3p to 143p.Rivals Newcastle United, however, shrugged off a 2-1 defeat by bottom of the league Crystal Palace to put on 3.5p to 97p..
