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Fitch affirms Miller Homes' BB- rating

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According to Market Intelligence, December 2022

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Fitch affirms Miller Homes' BB- rating

Fitch Ratings affirmed Miller Homes Group Holdings PLC's long-term issuer default rating at BB- with stable outlook.

The rating reflects the U.K. housebuilder's stable operational and financial profile, transparency in the capital structure and the lack of margin volatility, supported by a gross debt deleveraging in 2018.

Fitch said the company has a healthy free cash flow due to stable margins and sound working capital management and is able to compete with very large local rivals such as Taylor Wimpey PLC and Barratt Developments PLC. The company's high level of standardization in houses also reduces complexity and minimizes the risk of cost overruns.

The rating agency forecasts that funds from operations-adjusted net leverage will decline to about 2.0x by 2022 from 2.4x at the close of 2018, despite significant investment in the landbank over the same period.

Government support for the structurally undersupplied U.K. housing market would benefit Miller Homes as it aims to sell about 4,000 units by 2021-2022.

Financially, the company has strong liquidity comprising of an unused £130 million revolving credit facility and £83 million of available cash at the end of 2018, with lease-equivalent debt at £20 million.