Bovis set for further cuts and write-downs.

Byline: By HENRYK ZIENTEK Business Reporter

STRUGGLING housebuilder Bovis Homes today outlined plans to cut costs further as it warned of write-downs amid the housing market woes.

The company, which has developments at Lindley and Skelmanthorpe, said it now hoped annual overheads would be below pounds 45m by the end of 2008.

A major cost cutting drive has already seen it axe 40% of its staff since January.

The builder said activity and prices had come under further pressure since the half-year in "the worst trading environment" for many years.

Profit margins are being hit as it cuts prices on almost all its home sales.

Bovis also warned that it is expecting to make a write-down on its inventory in December.

Bovis expects to complete 39% fewer home sales this year, at about 1,800 against 2,930 in the previous year.

The business has been reducing prices to attract buyers and help with cash flow, but said there had been a marked weakening in the market since June.

It said: "The lack of mortgage finance - as evidenced by the 70% year over year decline in mortgage approvals for home purchase reported for the third quarter of 2008 - has led to a sharp decline in home buying activity.

"This, together with the general economic outlook, has weakened the confidence of prospective home buyers which is now creating further drag on housing transaction activity and placing downward pressure on house prices."

Bovis said it aimed to focus on selling finished properties, mainly houses rather than flats, which generate better returns.

It said it hoped write-downs would not be "significant".

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FLAGGING: Bovis is set to slash costs further as it faces up to a plunge in demand for new homes