Challenging times for Bellway

Dec 5 2008 by Peter McCusker, The Journal

THE UK stock market opened the day in positive territory yesterday as investors eyed an expected cut in interest rates of 1%, which was duly delivered at noon by the Bank of England’s Monetary Policy Committee.

However, after a volatile trading session, the FTSE 100 Index closed the day down 6.35 points at 4163.61.

In the North 40, Bellway was in focus after announcing that conditions had been challenging since October due to a lack of confidence and difficulties faced by potential homebuyers in securing mortgages.

The company added that although its net sales rate was running in line with expectations, at 50-60 units per week, this was more than 50% below the levels experienced last year and its order book at the end of November stood at £340m compared with £677m in 2007.

Bellway may have to review the value of its land at the end of January but stated that its plan to reduce borrowings by £100m by

July 31, 2009 was on target. Bellway shares climbed 5.5% and closed at 526p.

Shares in rival house builder, Barratt Developments, traded 9.4% higher and ended the session at 58.5p.

Elsewhere in the regional portfolio, Sage Group was in the spotlight after US investment bank Citigroup raised its recommendation on the shares to buy from hold but maintained its price target of 180p. The bank stated that the full year results, released on Wednesday, were better than it had expected and reflected positive earnings momentum by the company.

Fergus Westwood Fergus.westwood@brewin.co.uk