Bellway predicts record year as profits jump
In a trading update yesterday, the group confirmed its new financial year was off to a strong start, with reservation rates up by 12 per cent to 165 homes per week during the first 18 weeks.
The builder also expects to raise its average selling price by about 10 per cent. The upbeat comments from chief executive Ted Ayres come after the Newcastle-based group struck a record performance during the 12 months to the end of July, when profits nearly doubled to £354 million on an all-time high of 7,752 home sales.
Operating profit margins continue to rise as the group acquired better-quality sites, and should reach at least 21 per cent against an average of 20.4 per cent last year, the company said yesterday. This in turn is expected to drive up the return on capital.
“The group is committed to its strategy of creating shareholder value through disciplined volume growth and increasing the supply of much-needed new homes,” Ayres said at the company's annual meeting, where a 48 per cent hike in Bellway’s final dividend was confirmed.
“The measures announced in the government's recent autumn statement, particularly in relation to the amendments to the Help to Buy scheme in London and its extension in England until 2021, not only provide access to mortgages for home buyers but also provide further visibility in relation to the longer-term outlook when assessing land opportunities.”
The group spent £235m on land during the first 18 weeks, a modest increase on the same period a year ago. It has heads of terms agreed on a further 4,500 plots, up from 4,400 previously.
Customer demand remained “robust” throughout the typically quieter summer months, and the trend continued into the traditionally stronger autumn selling season, Bellway said. Newly-opened operating divisions in Bristol and Kent are both said to be performing well, with high levels of customer demand.
Average selling prices have increased by 5.8 per cent to £252,100, “modestly ahead” of expectations. The rate of increase is likely to be higher in the first six months of the current year, when the firm will complete the sale of a number of high-value London apartments, before settling back to more modest growth in the second half.
The company had net debts of £136m as of 6 December, down from £162m a year earlier, representing modest gearing of about 8 per cent. A further trading update is due on 10 February, when the company will advise shareholders on its first half performance.