Builder Bellway eyes 25% surge in profits despite 'flat' sales

HIGHER margins and the sale of more high-end homes will help Bellway to grow profits by 25 per cent next year even if sales volumes remain flat, according to its finance director.

Alistair Leitch told The Scotsman that, although the housebuilder did not expect a pick-up in sales before next spring, its order book had grown from 349.4 million to 397m.

He said the group was abandoning its target of increasing sales volumes by 10 per cent this year following a quiet autumn and the predicted stagnation in the housing market.

His comments came as the firm, the UK's fifth-largest housebuilder, swung back into the black in the year to 31 July by posting a pre-tax profit of 44.4 million. The surplus followed a loss of 36.6m last year when the group booked exceptional costs of 66.3m, including a write down to the value of its land bank. Revenue grew from 683.8m to 768.3m after the number of houses sold rose by nearly 5 per cent to 4,595 units. The average selling price lifted almost 6 per cent to 163,175.

Leitch said that Bellway's Scottish division had sold about 300 houses in the year to 31 July, a similar figure to the previous 12-month period. Selling prices had increased, out-performing parts of northern England.

But Leitch added: "You have to look at that sales figure in context. Three or four years ago we were selling 800 homes."

Bellway, the only major housebuilder to have continued to pay a dividend during the recession, yesterday recommended raising its final payout from 6p to 6.7p.

The increase takes the total dividend up from 9p to 10p.

Chris Millington, an analyst at Numis, said the group's share price did not reflect its "strong balance sheet, the conservative nature of the business and the expected growth in returns as high margin land feeds through both this and next year".

But shares fell 6.1 per cent to 565p after the gloomier sales forecast.