Bellway anticipates increase in operating margins

An interim management statement from Bellway revealed the housebuilder expects its full year operating margin to increase by around 300 basis points to over 20%, up from 17.2% in 2014 following what it described as a strong trading performance.

Excluded from this are the proceeds from the disposal of the company's entire portfolio of shared equity assets, which is expected to result in exceptional profit of £6.9m.

Its forward sales position is "strong", it said, with growth of 22% in the value of the forward order book to £1,270m compared to £1,040m a year earlier, representing 5,502 homes compared to 5,002.

It expects to achieve an increase in the average selling price to slightly above £220,000 for the year ending 31 July 2015, up from £213,182 a year earlier.

"Industry wide labour constraints remain a challenge, however, notwithstanding this, the board still expects completions for the year ending 31 July 2015 to exceed those achieved last year by around 850 units," the company added.

"The ongoing delivery of the growth strategy should lead to another year of substantial earnings growth."

The group didn't suffer any noticeable effect from the general election and said consumer confidence remained strong, with a favourable mortgage market, supported by Help to Buy, helping to satisfy customer demand.

Group chief executive Ted Ayres said: "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."

Sharesholders appeared unimpressed, with the stock's value dropping 1.6% to 2,330p in early trading.