24th Mar 2021 10:30
(Alliance News) - Bellway PLC on Wednesday reported a decline in pretax profit in the first half of the financial year, and said house sales would slow down in the second half.
Profit before tax in the half-year ending January 31 fell 4.0% year-on-year, to GBP280.2 million from GBP291.8 million. Revenue rose 11.6% to GBP1.72 billion from GBP1.54 billion.
Shares in the Newcastle-based housebuilder were down 2.2% to 3,413.86 pence in London. They're up 17% year-to-date.
Bellway reinstated its interim dividend at 35p per share. In the 2020 financial year it paid a final dividend of 50p per share.
Revenue was helped by an increase in the number of houses sold and a rise in the average selling price of 5.8%, as the stamp duty cut and the release of pent-up demand following the Spring 2020 lockdown lifted the UK housing market.
But profit was hit by narrower margins as housebuilding costs increased. Bellway also paid a further GBP20.3 million in exceptional costs towards improving fire safety in its legacy portfolio of apartment blocks.
The company expects sales volume to slow down in the second half, as it has a reduced level of work-in-progress and a higher proportion of houses in the early stage of construction. Bellway expects to sell a total of 10,000 houses this financial year, after selling 5,656 in the first half.
But the company was optimistic for the mortgage guarantee scheme announced this month, in which the UK government will underwrite high loan-to-value mortgages. The scheme will underpin customer demand and promote a stable and sustainable housing market, Bellway said.
"Bellway is in an excellent position to continue its long-term, disciplined growth strategy, increasing the supply of good quality new homes while generating future value for our stakeholders," Chair Paul Hampden Smith said.
By Ivan Edwards; [email protected]
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