Stewart Milne to offload £100m timber frame division
Stewart Milne Group (SMG) has put its £100 million timber frame business up for sale to capitalise on its strong growth and invest in land for new homes.
The company said it was putting Stewart Milne Timber Systems (SMTS) up for sale at a time when the market is “set to grow exponentially”, offering a “compelling investment proposition”, with its use anticipated to double in the next five years to meet government housing targets.
“As housebuilders tackle the dual challenge of achieving net-zero carbon targets and dealing with acute skills shortages, they are increasingly turning to modern methods of construction using renewable sources,” said the group.
The move will enable the group to prioritise its core business of building homes.
Alex Goodfellow, Stewart Milne Group MD of strategic development, who is leading the sale process, said: “With the scale of the opportunity in the growing timber frame market, SMTS presents a highly compelling investment proposition.
“We anticipate attracting a high level of interest from potential buyers who will invest in order to capitalise on that opportunity.”
SMTS has experienced “stellar” growth in the last five years, with a current order book of close to £300m, SMG said.
SMG has been investing in SMTS product and capacity at its factories in Aberdeen and Witney to keep up with the extremely strong demand.
Increased volumes have led to the creation of a third production facility in central Scotland.
Stuart Macgregor, SMG chief executive, added: “To keep pace with demand, it’s clear that further investment in production capacity in both Scotland and England will be required.
“As a privately run, independent company, we need to prioritise where we invest in the future.
“Since reopening last summer, after the initial Covid lockdown, we’ve seen record levels of activity in the UK housing sector.”
The buoyancy of the current homes market post-covid means land prices are increasing rapidly, Mr Macgregor said.
He added: “We have therefore chosen to divest our successful timber systems business and will focus on increasing investment in additional sites for Stewart Milne Homes.
“Using our considerable land-buying experience to take advantage of the development opportunities, we will invest in land in the short term and concentrate on growing our homes business in the longer term.”
Once a sale has been completed, Stewart Milne Group said it will be primarily focused on investing in the growth of its homes business in Scotland and North West England.