Bellway confident of significant profit growth after solid start

Housebuilder Bellway is looking forward to “another significant increase in profitability” this year after a solid start, with reservation rates up on last year.

The company said that trading has returned to a “more normal seasonal pattern”, with a slowdown in the summer being followed by a pick-up in the sales rate throughout autumn.

Total reservations taken in the 18 weeks between 1 August and 30 November averaged 147 per week, up from 144 year-on-year.

The overall improvement came despite the government’s Help to Buy scheme boosting activity in the same period in 2013, though the private reservation rate has slowed as a result of the tough comparative.

Meanwhile, Bellway said that the Mortgage Market Review has not had a detrimental impact on sales with cancellation rates still at a historically-low level.

The company noted “positive market conditions” across London and the rest of the country, but said that the significant revenue growth recently seen in certain parts of the capital has now “abated” and returned to more sustainable levels.

"Demand for new housing is resilient across the country and continues to be supported by the availability of affordable, higher loan to value mortgages and in particular, the continuation of the government's Help to Buy scheme,” said chief executive Ted Ayres.

In the land market, Bellway has spent £233m on land and land creditors during the period, up from £121m last year, and has heads of terms agreed on further 4,400 plots with a value of £320m.

“Market conditions with respect to both sales and land buying continue to be favourable and provided they remain unchanged, Bellway should be able to deliver significant earnings growth and ongoing improvements in return on capital in the year ahead,” the company said.

The company said it expects operating margins to be around 20% for the year ending 31 July 2015, up from 17.2% previously.