Bellway PLC on Tuesday reported ‘sustained improvement’ in demand and a healthy balance sheet despite lower reservations and a smaller order book, and is optimistic about its full-year results despite the potential impact of cost of living pressures.

Shares in Bellway were down 2.5% at 2,182.00 pence on Tuesday in London.

The Newcastle Upon Tyne, England-based homebuilding company reported a ‘sustained improvement in sales demand’ during the spring selling season, compared with tougher trading conditions in the last three months of the 2022 calendar year.

From February 1 to June 4, Bellway said its overall reservation rate decreased by 25% to an average of 190 per week from 253 per week for the same period a year before. It said the average private reservation rate decreased 30% to 139 from 198 per week. However the overall cancellation rate ‘remained modest’ at 15% compared with 12% the prior year.

Bellway said headline pricing has overall remained firm. However, it continues to use targeted incentives in certain regions to attract more customers and secure reservations. It reported a ‘lower, yet still sizeable’ £1.71 billion forward order book comprising 6,172 homes, down by around 41% from £2.40 billion and 8,152 homes.

Bellway insisted that its balance sheet remains strong despite net cash decreasing by around 74% to £42 million at June 4 from £160 million at June 5, 2022.

Bellway repeated its declaration of a 45.0p per share interim dividend, unchanged from the prior year, and reaffirmed that it expects the total payout for the year ending July 31 to remain unchanged at 140.0p per share. It also said its £100 million buyback programme is progressing well, and has purchased 1.9 million shares for £44.0 million in the period.

Despite the decreases in reservations, Bellway said it was on track to deliver its full-year volume output target of around 11,000 homes, down 1.8% from 11,198 homes, with a 4.6% reduction in the average selling price to £300,000 from £314,399. It still expects a lower annual volume output in financial 2024 due to various factors including the reduced order book. However, Bellway maintained that it is still well-placed to deliver long-term volume growth.

‘Bellway has delivered an encouraging trading performance, buoyed by a seasonal uplift through the spring,’ said Chief Executive Jason Honeyman.

‘While customer interest is currently healthy, the board remains mindful that cost of living pressures and the uncertain path of future interest rates could impact housing demand. Notwithstanding this, Bellway’s experienced teams, strong balance sheet and high quality land bank, position the group well to successfully navigate changing market conditions and continue to play an important role in increasing housing supply in the years ahead.’

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