Bellway is confident of building more homes than expected in the coming year, thanks to the improvement in the housing markets over the summer.
The housebuilder said that in the last few months, more people had put down deposits on its homes, which enabled it to increase build volumes by “materially” this year.
Jason Honeyman, CEO, stated that “customer confidence has improved since the beginning of the calendar year.” “We are ready to take advantage of a more favorable market. We’re prepared for growth.” We are confident that we will invest again in land, and we are confident that we will invest again in people.
Bellway, reflecting the housing market downturn following Liz Truss’ mini-budget of September 2022, built 7,654 apartments and houses between August 20,23 and July 2023, a third less than its previous fiscal year. The company’s revenues fell 30% to £2.38billion from £3.41billion.
Costs of £5.4m relating to Bellway ‘s aborted purchase of Crest Nicholson a smaller competitor further reduced profitability.
The final dividend to be paid out on January 8 reflects the struggles of last year and has been reduced by 60% to 38p per share.
The group has a target of “at least” building 8,500 houses in its current financial period, which ends at the end of the month of July. This is an increase of 10%. Profit margins of about 11% would translate into an operating profit around £290million, which is slightly higher than what most analysts expected.
Bellway’s shares rose 254p or 8.3 percent to £33.06 in response to its bullish forecast. The shares have not been higher since 2022 when the housing market still enjoyed its glory days after the lockdown.
John Thomas Bell founded Bellway in Newcastle in 1946 as a family-owned small housebuilder. The company is listed on FTSE 250 and has a market capitalization of nearly £4 billion.
As with all home builders, the company has had a difficult time selling its homes over the last two years due to the stifling effect of rising mortgage rates and economic uncertainty.
Bellway, on the other hand, has recently seen a return in demand. The developer has sold 0.59 homes per week on each of its 245, spread across the country since the beginning of August. This is almost 50% more than the same period in the previous year.
This has led to an increase in the number of orders, which now stands at 5,109 houses worth £1.43bn, compared with 4,636 houses and £1.23bn this time last.
Honeyman said that the increase would have been higher if not for the budget which is looming. He also stated that some customers are “nervous”.
Bellway’s prices have “remained stable”, with modest increases in the north of England, Scotland. It expects the average selling price of its cars to increase to around £310,000 in this year. This is slightly higher than what most analysts predicted, and will be up from £307900 in 2023.
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