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Bellway profit rises as demand remains strong

By Michele Maatouk

Date: Tuesday 17 Oct 2017

Bellway profit rises as demand remains strong

(ShareCast News) - FTSE 250 housebuilder Bellway reported a jump in full-year profit and revenue on Tuesday as demand for new housing remained strong.
In the year to 31 July, pre-tax profit rose 12.6% to £560.7m on revenue of £2.6bn, up 14.2% on the previous year as demand for new housing remained strong across the country, with the group taking an average of 187 reservations per week, up 10.7% on 2016. Meanwhile, the number of completions was up 10.6% to a record 9,644 homes and the average selling price rose by 3% to £260,354.

The Help to Buy scheme continued to be an important selling tool, used in 35% of the group's completions, versus 30% the year before. In London, where the maximum equity loan percentage can be up to 40% of the property value, Help to Buy was used in 32% of completions.

Earnings per share increased 12.7% to 370.6p, giving a total dividend per share of 122p, up from 108p a year ago.

Bellway said the order book at 1 October was up 17.4% to £1.4bn and comprised 5,034 homes, versus 4,701 homes on 2 October 2016.

The company said its outlook remains positive and it expects to grow volume by at least 5% and for the overall average selling price to increase to around £280,000 in the current financial year.

"The parameters supporting growth are strong as there continues to be an imbalance between the supply and demand for high quality new homes. Interest rates are low, with the Bank of England base rate reducing to 0.25% at the start of the year, ensuring that financing a new home remains affordable. The availability of sustainable mortgage finance is also good, supported by a responsible lending environment and the Government's Help to Buy scheme.

"The land market remains attractive, providing good quality opportunities at attractive rates of return and the planning environment is generally favourable. Bellway has both the financial and operational capacity to capitalise on these investment opportunities. Whilst the skills shortage facing the entire construction sector is a moderator to the industry's overall ability to deliver growth, it is not preventing Bellway from continuing to increase its output of new homes."


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