7th Aug 2015 07:55
LONDON (Alliance News) - FTSE 250-listed housebuilder Bellway PLC on Friday said it sold more houses at higher prices in its 2015 financial year and said its forward order book leaves its looking strong moving into the new year.
Bellway said demand for new homes has remained strong over the course of the year, supported by the better mortgage financing environment in the UK. The Bank of England base rate remains at its historic low and, notwithstanding the possibility of an interest rate hike in the future, new homes remain an attractive and affordable purchase for potential buyers, Bellway said.
The group said it secured an average of 153 reservations per week over the year, up from 148 a year earlier, with its private sales rate gathering pace in the second half on the back of new site openings and its ongoing investments in work in progress. The pricing environment for homes has also remained positive, boosted by robust housebuyer demand across the country.
Amid this still positive backdrop, Bellway said it sold 7,752 homes in the year to the end of July, up 13% from the 6,851 it sold a year earlier, with the average selling price of those homes rising to GBP224,000 from GBP213,182. The group said it has 4,568 homes in its forward order book, up from 4,363 at the end of its 2014 financial year, with a total value of GBP1.09 billion, up from GBP924.3 million.
Bellway said its operating margin for the year is set to rise by around 300 basis points to over 20%, from 17.2% a year earlier.
On the land side, the group contracted to acquire 88 sites over the year and spent a total of GBP620 million, up from GBP460 million a year earlier, on land opportunities that meet or exceed its minimum acquisition criteria based on gross margin and return on capital employed.
Bellway said the land market remains attractive and the recent extension of the government's Help to Buy scheme to 2020 is set to provide the company with more stability and visibility when considering future land acquisitions.
"The group has continued to trade well, against a backdrop of favourable market conditions, delivering a record number of legal completions, whilst further adding to an already strong forward order book. We have made a substantial investment in attractive land opportunities and the group has the balance sheet and operational capability to invest further, thereby enabling Bellway to continue delivering additional and much needed new homes," said Chief Executive Ted Ayres.
Bellway shares were down 0.4% to 2,446.00 pence on Friday morning.
The trading update from Bellway comes in the wake of a slew of upbeat reports from housebuilders over the course of July, as the sector indicated that it managed to successfully navigate the slowdown in the property market in the UK in the run up to May's General Election.
Bellway's larger rivals - Taylor Wimpey PLC, Persimmon PLC and Barratt Developments PLC - have all posted trading updates and earnings over the course of the past month in which they reported higher home sales and higher selling prices, as did its FTSE 250-listed peer Bovis Homes PLC.
Broker Numis said that, should market conditions remain favourable, there remains scope for further upgrades to Bellway's rating given both the strong sector and the top-quartile returns the company is producing does not yet look to have been factored into its rating against peers.
By Sam Unsted; [email protected]; @SamUAtAlliance
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