Bellway PLC on Tuesday reported sharply higher profit for its recent financial year, despite a slight decline in revenue, thanks to a reduced charge for building safety remediation.
The Newcastle Upon Tyne-based housebuilder reported pretax profit of £483.0 million in the 12 months that ended July 31, up nearly 60% from £304.3 million the year before.
Revenue edged down 3.7% to £3.41 billion from £3.54 billion, but Bellway booked £38.6 million in net legacy building expense in the recent year, down significantly from £344.2 million in financial 2022. The company said it now has greater clarity on the scope of future remediation required.
Even so, Bellway left its annual dividend unchanged at 140.0 pence per share. The company said this represents 2.3 cover by underlying earnings, as previously guided. For financial 2024, Bellway plans underlying dividend cover of 2.5 times.
Bellway completed 10,945 homes in financial 2023, down from 11,198 the year before, and the average price also slipped, to £310,306 from £314,399. Underlying operating margin shrank to 16.0% from 18.5% in financial 2022, due to higher build costs and overhead inflation.
Looking ahead, Bellway said customer demand continues to be hurt by mortgage affordability in the UK. The reservation rate in the nine weeks since August 1 has been 133 per week, down from 191 a year before. Forward sales totalled £1.23 billion as of October 1, down dramatically from £2.09 billion at the same point a year ago. The order book has 4,636 homes, down from 7,257 a year before.
As a result of the lower reservation rate and smaller order book, Bellway said it is targeting building just 7,500 homes in financial 2024, down 31% from financial 2023. It hopes to end the new financial year with a higher order book than the 4,411 homes it had at the end of July. This will ‘serve as a platform for a return to growth beyond the current financial year’.
Bellway shares were down 1.7% at 2,126.00p early Tuesday in London.
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