Galliford delivers on profit target

House buildingA building firm whose workload has included the Olympic Park and Wimbledon's centre court roof has repaid investors by smashing a three-year profit target.

Despite battling "difficult markets" in construction, Galliford Try said a stellar performance by its Linden Homes housebuilding division meant profits leapt by 80% to £63.1 million in the year to June 30.%VIRTUAL-SkimlinksPromo%
This is well above the benchmark of £60 million it set in 2009 when it asked shareholders to stump up £125 million to fund an ambitious expansion.

Construction revenues and margins were squeezed, with operating profits down 15% to £18.9 million despite a boost from work on the Olympics, which included foundations for the basketball arena and help in building the athletes' village.

This was compensated for by its housebuilding division, which completed 3,039 homes in the year, meaning it has beaten its target of doubling in size. Profits at the division more than doubled this year to £75.1 million.

The group also presented shareholders with an 88% hike in its dividend. Its shares rose 3% and are now more than a third higher than when the rights issue was announced.

Chief executive Greg Fitzgerald said: "Against a background of challenging and uncertain economic conditions I am very pleased to report that we have exceeded the objectives of our three-year transformational housebuilding plan, delivering a substantial increase in profits and return on capital."

The construction order book has remained stable at £1.7 billion and the Uxbridge-based company noted that 2013 would be a key year of investment for water companies, helping offset lower levels of activity in other markets.

Mark Hughes, an analyst at Panmure Gordon, said the performance of the housebuilding arm was "extremely strong", while its construction arm had also outperformed the wider industry.

He predicted that the group's focus on the south will continue to boost margins at its housebuilding arm but profits at its construction arm will contract further in the current year amid tough competition.

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