Bellway posts rise in completions, to build 5% more home this year

FTSE 250 housebuilder Bellway reported a rise in housing completions in the six months to the end of January and said it expects to build 5% more homes this year.

The company posted a 6.5% jump in the number of housing completions compared with 2016 to 4,462, while the forward order book rose to £1.12bn from £1.03bn, comprising 4,487 homes versus 4,434 the year before.

The average selling price of private completions rose by more than 4% to £291,000 and for the full financial year, Bellway expects to achieve at least this rate of growth in private average selling price following investment in higher value locations over recent years.

The overall average selling price of completions was £256,000, down from £257,280 in 2016, slightly dampened by a greater proportion of lower value social homes, with this percentage rising, as previously guided, to almost 21% of the total from 13%.

The overall average selling price is still expected to rise to around £260,000 for the year ending 31 July 2017 from £252,793 in 2016.

Bellway said all divisions are performing well in terms of geography and while the rate of house price inflation has moderated, sales prices achieved on reservations have been in line with or modestly ahead of expectations. In the capital, sales prices and demand remain firm, with a significant requirement for affordable homes.

Bellway said a strong trading performance is expected to result in an operating margin of around 22%.

Chief executive Ted Ayres said: “Bellway has delivered another strong half year result, increasing both the number of legal completions and the value of the forward order book. Market conditions remain positive and accordingly Bellway is continuing to invest in a controlled manner, both in land and work in progress, in order to achieve further disciplined volume growth, thereby creating additional value for shareholders.”

The group said customer demand remains robust and the purchase of a new home remains affordable, supported by a competitive mortgage environment and the continued availability of the government’s Help to Buy scheme. This strong demand, together with an ongoing programme of site openings, has helped the company achieve a reservation rate of 166 homes per week, up 6% compared to the same period last year.

Bellway said the strong order book and investment in work in progress should allow it to deliver further volume growth of around 5% in the current financial year.

Numis, which rates the stock at 'buy', said: "Overall we think this is a solid statement and full year forecasts are looking well
underpinned. We continue to see Bellway as offering one of the highest levels of upside in the sector given its volume growth potential and its high return on equity – which is being achieved in a risk averse manner."

At 1226 GMT, the shares were up 3.4% to 2,601p.