5th Jun 2015 09:34
LONDON (Alliance News) - Bellway PLC Friday said it expects its housing completions to rise at the close of its financial year, with its operating margin set to improve year-on-year and its forward sales book strengthening as it said it had seen little impact from the General Election in the UK.
The FTSE 250-listed housebuilder said it expects housing completions for the year to the end of July to be around 850 units higher than the 6,851 it reported a year earlier. Should that prove the case, it would mark an acceleration in sales for Bellway in the second half, with the group having posted 3,754 sales in the first half.
The company said its full-year operating margin should improve by around 300 basis points to over 20% in the year, up from 17.2% a year earlier, on the back of strong trading conditions in its markets and continued control over its construction and administrative costs. Its operating margin in the first half was 19.9%.
Bellway also said its forward sales position going into the next financial year is set to be around 22% higher in value year-on-year at GBP1.27 billion, up from GBP1.04 billion at the end of its 2014 financial year. Though the company said labour constraints, which have hit the wider housebuilding industry, remain a concern it still expects to increase completions this year and anticipates making further progress in its 2016 financial year.
Bellway said the strong start to the Spring selling season has continued, with no noticeable impact on customer sentiment emanating from the UK's General Election in May and consumer confidence remaining strong on the back of a favourable mortgage market, helped by the government's Help to Buy scheme. Reservations for the company since February 1, the start of the second half of its financial year, have averaged 182 per week, up from 177 per week in the comparable period in 2014.
The pricing backdrop for the company has also remained strong, with Bellway predicting its average selling price for the financial year will be GBP220,000, up from GBP213,182 a year earlier and slightly ahead of the GBP219,300 average price it reported for the first half.
The group said that while the land market in the UK remains competitive, particularly in an around the South East of England, it has spent GBP500 million on land and land creditors since the start of its financial year in August, up from GBP400 million a year earlier, and has heads of terms agreed on a further 6,400 plots.
It said it now has all the land acquired that it will require to meet its growth targets for its 2016 financial year and said its outlook beyond that is supplemented by its owned and controlled pipeline, which totals around 14,600 plots which it is currently pushing though the planning system. It also said that following what appears to be a good outcome from the UK's General Election, with the Conservatives winning a majority, the planning environment is set to be broadly positive for housebuilders.
"Positive market conditions, implementation of our strategy for growth and a continuing focus on return on capital employed are allowing Bellway to deliver a further increase in volume and a significant rise in profitability. Our disciplined investment in land, alongside plans to open a seventeenth operating division early in the next financial year, ensure that the group is well positioned to create additional value for shareholders," said Ted Ayres, Bellway's chief executive.
Bellway shares were down 1.7% at 2,328.00 pence Friday morning.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Bellway