Bellway confident as results hit a record

Oct 17 2007 By Graeme King, The Journal

HOUSEBUILDER Bellway has posted record results and remains confident despite concerns about the fragility of the economy amid the present credit crunch.

The Newcastle company recorded pre-tax profits of £234.8m for the year to July 31, an increase of 6.4% on a year earlier after selling 7,638 homes in the year to July 31. Turnover was also up a healthy 9.2% to £1.35bn.

And while chief executive John Watson said Bellway would have to watch market conditions carefully in the months ahead, he said the company was well positioned with an order book of some £667m – up £20m on the same time last year.

"The coming weeks will give a better indication of the overall national sentiment towards the housing market, but the board, at this time, believe that the key fundamentals remain unaltered," said the company.

Bellway said this figure, when combined with completions, represented 57% of its planned output after just two months of its financial year.

The company said the market since August remained competitive and incentive led, but added its policy of forward selling homes continued to be fruitful.

Bellway also said it was well positioned to capitalise on acquisition and development opportunities should they arise in the coming months.

Mr Watson said the company’s divisions in the North-East, Scotland and in and around London traded well during the period.

However, Bellway said Yorkshire, the North-West and the Midlands had seen a tightening in demand, with the market increasingly turning to the use of incentives in order to maintain volumes.

"It’s pleasing to deliver what we were promising 12 months ago. Our numbers are in line with most analysts’ expectations," said Mr Watson.

Also yesterday, Bellway released figures showing it is achieving 75% satisfaction with its customers, which he said was significant as this was the initial target figure given by the Kate Barker housing review as to what housebuilders should be looking to achieve.

The Barker review, carried out for the Treasury some months ago, had urged housebuilders to "up their performance" and reach at least 75% satisfaction.

But the chief executive admitted the company’s figures meant 25% of those surveyed were not entirely satisfied with their home.

He said: "That’s where we have got to improve.

"If you buy a Bellway house, we use an outside consultant to send you a survey. People might be not happy with the garden size, the quality, the price, the discount – it’s quite a complicated thing.

"The point we are making is we are attacking the problem and we want to know if people are satisfied or not."

On prospects for the months ahead, he said: "We’ve got to wait and see. Housing is a confidence thing. If the mindset is that people want to wait and see where the market is going, sales will slow down. But as a builder, we are still planning increases to our output this year."

See page two to read how other North-East developers are dealing with the global credit crunch.