Housebuilder Galliford Try (GFRD) expects profit to hit the upper end of analysts’ full year forecasts of £46m to £59m thanks to a strong underlying financial and operating performance across the company.
The dividend is safe despite a profit warning in the company’s construction division in May, triggering a 7.7% relief rally to £12.57.
The Linden Homes division is anticipated to deliver further volume growth and higher operating margins.
In the second half of the year to 30 June 2017, sales growth in the division accelerated, which was driven by a solid growth in volumes.
Canaccord Genuity analyst Aynsley Lammin says the trading update is ‘reassuring’, highlighting better than anticipated net debt of £250m.
Concerning the dividend guidance, the analyst believes it looks ‘well supported’ for the financial year 2018, but keeps his recommendation on the stock at ‘hold’.
The construction division enters the 2018 financial year with an order book of £3.5bn, accounting for 84% of projected revenue this year.
Earlier this year, Galliford revealed escalating costs on several previously agreed construction projects in which it is a partner, leading to a one-off £98m hit to complete contracted work.
