Scotia Homes has highlighted a “strong level of forward sales” cushioning the blow of a depressed market amid the cost-of-living crisis.
The north-east housebuilder said it was monitoring the “changing economic landscape”.
High inflation and spiralling mortgage rates have heaped further pressure on households, many of which were already struggling to keep up with soaring energy bills.
Scotia chairman Gary Gerrard said: “The housebuilding sector has undoubtedly become more challenging since the year-end.
“A combination of high cost inflation and weaker demand due to the cost-of-living squeeze and increasing mortgage rates has depressed inquiry rates.
“The board continues to monitor the situation closely and is using incentives such as part-exchange, assisted sale and mortgage subsidy to support sales levels.”
Scotia’s sales surged 21% last year
He added: “The group has a strong level of forward sales and we remain confident demand for our high quality homes in desirable locations will be sustained, notwithstanding the difficult macro-economic situation.
Mr Gerrard was speaking as Scotia, based in Ellon, Aberdeenshire, announced a jump in pre-tax profits to £3.9 million – from around £3.5m a year earlier – during the 12 months to June 30. Operating profits surged 16% to £4.4m.
Scotia said turnover of £40.1m in the latest period was 21% ahead of the previous financial year as the business “continued its strong recovery from the impact of the Covid-19 pandemic”.
Our 2022 results are really impressive considering the challenges we faced.”
Graham Reid, joint managing director, Scotia Homes
The company highlighted ongoing strength in the Aberdeen city and shire market and said it also continued to see ood demand for “prime sites” in locations such as Aviemore and Kincraig in Cairngorm National Park.
Mr Gerrard said: “We continue to invest in the business and completed the acquisition of Timber Kit manufacturer, Caledonia Homes (Scotland) Limited post year-end.
Scotia said it built a total of 165 new homes in 2021-22, up from 142 the year before.
The firm’s pipeline of current and future projects covers sites in Aberdeen, Arbroath, Aviemore, Ballater, Blairgowrie, Brechin, Braemar, Dundee, Ellon, Forfar, Inverness, Kincraig, Kintore, Laurencekirk, Nairn, Newmacher, Oldmeldrum, Perth, St Andrews and Tarves.
Joint managing director Graham Reid said: “Our 2022 results are really impressive considering the challenges we faced with labour and material availability shortages, and high levels of cost inflation during the period.
Profit margins up 24%
“We saw increased sales volumes across all of our sites and with house price inflation continuing to outstrip material price increases, our gross margins were further improved to an excellent 24%.”
Mr Reid added: “The benefit of our geographic diversification strategy was very apparent as our sites in Angus and the Highlands delivered strong sales performance
“Aberdeen city and shire showed a more steady recovery from the price falls seen over the previous five years.”
Scotia has been led by joint MDs Mr Reid and Richard Begbie since the retirement late last year of Martin Bruce, who founded Scotia in 1990, with his late father, Bill Bruce.
The company employed 166 people, on average, during the year to June 2022.
Previously controlled by the Bruce family, Scotia is now 95% owned by Camlin Group, a joint venture of property entrepreneurs Bruce Linton and David Cameron.
Mr Linton is the property entrepreneur behind Dundee-based James Keiller Holdings.
Mr Cameron has other property interests, including ownership of St Giles Shopping Centre in Elgin, and is also a director of Inverness Caledonian Thistle FC.
The joint venture acquired Scotia in May 2020 for an undisclosed sum.