HOUSEBUILDER Bellway is expecting to announce better than expected profits this year after a rise in both the number of homes it has completed and the average selling price.
The Newcastle company said pre-tax profits for the year ended July 31 would be “modestly ahead of the current market consensus of £62m”.
It also revealed that it has legally completed 4,922 homes, up 7.1% on 12 months ago, and the average selling price has risen from £163,175 to around £175,000. However, it said the price increase was mainly due to a change in the product mix rather than house price inflation.
Larger peer Taylor Wimpey reported a forecast-beating rise in margins on Wednesday, and its chief executive said only a major external shock would destabilise the market at present.
Bellway echoed this sentiment and said it is looking to further increase its bottom line profit, if market conditions remain stable. Despite summer being a traditionally slower selling period, Bellway’s reservation rates were up on last year and its order book rose from £421m to £426.8m to hit 2,497 homes.
“Reservation rates throughout the summer months, whilst traditionally a slower selling period, have been ahead of the same period last year,” said the group.
Bellway, along with other housebuilders, has focused more on popular family-sized homes to boost margins, and the firm said its second-half operating margin will hit 10%, lifting the annual margin from 6.7% to 8-9%.
On July 31, the group had net cash of £3m with combined bank facilities of £290m after spending around £250m on land and land creditors during the year. In addition, some 4,500 plots with an approximate value of £230m currently have terms agreed.
“Bellway’s continuing aims for 2011/2012 are to deliver incremental volume growth, repair operating margins and, through changes in product mix, improve average selling prices, all of which are largely dependent on the level of consumer confidence and the availability of mortgage finance,” said the company.
“Notwithstanding the current global economic uncertainties, should market conditions remain stable and reservations follow their normal seasonal trends, then the board looks forward to delivering these aims and, in so doing, further increase profit before tax.”
The company also announced that finance director Alistair Leitch will be retiring at the end of January after 31 years with the group. He joined Bellway as divisional accountant for Scotland in 1981 and rose through the ranks to be appointed in his current role in 2002.
Bellway said: “The board would like to place on record its sincere gratitude for his dedicated service and highly valued contribution to the group over the years and wishes him a long and happy retirement.”
Leitch will be replaced by the current group chief accountant, Keith Adey, a Durham University graduate who joined Bellway from Grainger in 2008. Bellway’s full-year results will be published in October
The 64-year-old business, which employs around 1,400 people nationwide, reported pre-tax profits of £24m in the half year to January 31, up from £19m a year earlier.
