Bellway booming as builders enjoy looser planning permissions
Bellway hoisted its interim dividend 10% as the housebuilder enjoyed continued strong demand in the first half and maintained its targets for the full year as the second half got off to a strong start to the spring selling season.
Bellway
2,796.00p
16:45 17/05/24
FTSE 250
20,749.90
16:49 17/05/24
FTSE 350
4,631.57
16:49 17/05/24
FTSE All-Share
4,584.23
17:09 17/05/24
Household Goods & Home Construction
14,285.98
16:49 17/05/24
Revenue of £1.15bn for the six months to the end of January was a 5.9% improvement on the same period a year ago as the company completed 4,462 homes at an average selling price up 4% to £256,140.
For the full year the number of homes sold is expected to rise by at least 5% and the ASP to £260,000.
Customer demand has remained strong, resulting in the reservation rate increasing 6.4% to 166 sales per week, and even though labour shortages placed upward pressure on building costs throughout the sector, Bellway kept a lid on costs and expanded the operating margin by 60 basis points to 22%, where it is expected to finish the year.
Profit before tax rose 9.3% to £247.6m, earnings per share by 10.2% to 163.9p and the half-time dividend was hiked 10.3% to 37.5p.
Directors said it expected to keep the dividend covered around three times by earnings for the foreseeable future as sufficient land opportunities remain available that meet or exceed its required returns.
The land market remained attractive in the first half, allowing Bellway's land teams to identify sufficient opportunities to meet those targets, agreeing to acquire 6,287 plots and with an owned and controlled land bank rising to 37,931 plots - of which 18% is in London.
Chief executive Ted Ayres said the planning environment remained positive, with an increasing number of plots granted planning permission by local authorities and many also now identifying larger sites to achieve their required housing supply in accordance with the National Planning Policy Framework.
"Bellway, with its strong balance sheet, is well positioned to make competitive bids on these sites. Whilst helping to secure a land supply, more sizeable sites can be capital intensive and the pace of development is constrained by local sales demand and the time it takes construction teams to deliver onsite infrastructure requirements," he said, stressing the company's strict investment discipline.
In the six weeks since 1 February the group has achieved a reservation rate of 246 homes per week, up 18% thanks in large part to the release of three London developments.
The strong start to the spring selling season has resulted in the order book at 12 March 2017 growing to 5,465 plots from 5,048 plots a year ago and the value rising by 18% to £1,415.4m.