11th Feb 2014 10:13
LONDON (Alliance News) - Housebuilder Bellway PLC Tuesday reported further revenue growth as the UK housing market continued to recover, helped in part by the government's Help to Buy mortgage guarantee scheme, and maintained its guidance for an operating margin of over 15%.
In a trading update, Bellway said its housing revenue rose to about GBP690 million in the six months to end-January, from GBP486.7 million a year earlier, as legal completions rose by a quarter to 3,245, from 2,597, and average selling prices went up to GBP212,000, from GBP187,426.
"The group has benefited from continued strength in the UK housing market, supported by strong consumer demand, together with more widespread access to affordable mortgage finance which has largely been driven by the availability of Help to Buy," the company said in its statement.
All the UK's housebuilders have reported an accelerating recovery in the UK housing market through 2013 and into this year, particularly in London and the southeast, where Bellway has high exposure. The builders virtually halted new building in the wake of the financial crisis as banks pulled mortgage financing and the ensuing economic crisis put off house buyers. The companies instead focused on paying down debt.
The recovery has been helped by the government's Help to Buy mortgage guarantee scheme, which guarantees part of a borrower's mortgage advance, allowing them to get a loan with a lower deposit than would be normally required.
Back in December, Bellway had predicted that its operating margin would be over 15% in the current financial year thanks to the recovery. Tuesday, it said a growing proportion of completions from higher margin land, together with a more efficient overhead base as the business grows in size, should result in an operating margin in excess of 15% for the first six months of the financial year and it expects a further improvement after that as long as the markets continue to be good.
It said it has taken an average of 137 reservations per week (2013 - 97) in the period since August 1, up from 97 a year earlier, from an average of 224 outlets compared with 215.
Its order book at the end of January stood at 3,836 units, up from 2,467 a year earlier. In value terms, the book is worth almost GBP783 million, up from GBP453 million.
"Bellway's ongoing investment in land, together with the strength of the forward order book, ensures that the group is well positioned to deliver further volume growth and as a consequence, the board now expects legal completions to increase by over 15% for the full financial year," the company said.
It said its land buyers continued to identify and acquire land opportunities that met or exceeded Bellway's minimum acquisition criteria measured by gross margin and return on capital employed. It said that while competition for land in some areas of the country is increasing, the number of opportunities to acquire land has also increased.
It said it spent GBP240 million (2013 - £145 million) on land and land creditors during the period, up from GBP145 million a year earlier. It also agreed heads of terms on a further 4,700 plots worth GBP217 million.
Bellway shares were up 2.2% at 1,648.00 pence Tuesday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Bellway