Bellway reinstates dividend, reports rise in forward order book

House builder Bellway reinstated its dividend as it reported a slight fall in interim profits and a strong forward order book.

The company on Wednesday said pre-tax profits for the six months to January 31 fell 4% to £280.2m. The forward order book at 14 March was 8.4% ahead at £1.64bn comprising 6,028 homes, up from 5,772 homes a year ago.

Revenue increased 11.6% to £1.72bn and a dividend of 35p a share was declared.

Bellway said it expected to sell 10,000 homes, up from 5,321 homes last year, with margins expected to be around 17%, down from 19.3%.

The average selling price grew 5.8% to £303,206, and the strong order book allowed it to raise average selling price guidance to more than £295,000 for the full year, up from £286,570 last year.

Chief executive Jason Honeyman said the temporary extensions to both the stamp duty holiday and the government's Help-to-Buy regime "have provided more certainty with regards to the completion profile over the coming months"

"As a result, the board now expects that Bellway will complete the sale of around 10,000 homes (31 July 2020 - 7,522 homes) in the current financial year."

Richard Hunter, head of markets at interactive investor said the reintroduction of a dividend reflected Bellway's improving fortunes and with a current yield of 1.5%, there was scope "further increases which could be weighted towards the second half of this year".

"At the same time, while the housing market remains stable, the possibility of rising unemployment and the eventual removal of government-led support schemes will put additional pressure on the sector as a whole in due course."

However, Bellway's share price had seen an increase of 78% over the last year, as compared to a rise of 51% for the wider FTSE 250, Hunter said.

"The company remains on the fringes of inclusion in the FTSE 100 and its strategy of land acquisition for future profit sits comfortably with investors, with the market consensus of the shares as a strong 'buy' still in place.”