Bellway profit seen in line with market views but operating margin set to moderate

Bellway said on Thursday that full-year pre-tax profit is expected to be in line with current market expectations as it built a record number of new homes, but the housebuilder cautioned that the operating margin was set to moderate further.

In an update ahead of its preliminary results in October, the company said completions rose 5.7% to a record 10,892, while housing revenue is expected to increase by more than 8% to almost £3.2bn.

Meanwhile, the average selling price ticked up 2.5% to £292,000.

The balance sheet was "strong", Bellway said, with net cash of £201m versus £99m in 2018. In addition, the forward order book, which rose to 4,878 homes from 4,841 last year, provides "a solid platform from which to deliver further, more moderate volume growth in the year ahead".

The company's operating margin is expected to moderate further from the 21.5% reported at the end of January. Bellway said that while the pricing environment remains firm, the margin enhancing benefit of house price inflation continues to diminish.

Chief executive Jason Honeyman said: "Bellway has concluded another successful year, further increasing the supply of much needed new homes and delivering a record number of housing completions.

"Quality and customer care remain a priority for the business and this has helped the group achieve recognition as a five-star homebuilder for the third year in succession. Trading conditions remain stable and customer confidence is resilient. This, together with a strong forward order book and a healthy balance sheet, ensures that Bellway is well placed to continue its long term growth strategy.”

The company said underlying demand for new homes remains "strong", underpinned by the Help to Buy scheme and low interest rates.

At 0850 BST, the shares were down 2.7% at 2,804p.