An encouraging set of first-half results seemed to have already been priced in by the market at housebuilder Bellway (BWY) with the shares falling 2.5% to £34.06 amid a slight recent dip in reservation rates and margin pressure.
The company reported a fall in first-half profit thanks to the lower margins, but reinstated its dividend on an upbeat outlook for the year.
For the six months to 31 January, pre-tax profit fell to £280.2 million from £291.8 million year-on-year, while revenue increased 11.6% to £1.72 billion.
Volumes advanced 6.3% to a record 5,656 homes, but the operating margin fell to 17.3% from 19.3%.
Looking ahead, the company expects to sell 10,000 homes for the financial year as a whole, up from 5,321 homes last year, with margins expected to be around 17%.
‘ROBUST’ FORWARD SALES
The average selling price grew 5.8% to £303,206, and is expected to be more than £295,000 for the year, up from £286,570 last year.
The company touted a robust forward sales position, with the forward order book at 14 March 8.4% ahead at £1.64 billion, compared with £1.52 billion last year.
Canaccord Genuity analyst Aynsley Lammin commented: ‘The group has delivered a good, solid set of interim results broadly in line with our forecast. As expected, it saw a record level of completions with operating profits broadly in line with the previous year.
‘The group benefited from the good recovery seen in the housing market during the calendar second half of 2020. Net cash of circa £346 million was substantially higher than we expected as it benefited from the strong level of completions with a good amount of the cash spend on land scheduled during its second half.
‘While reservations rates are modestly down over the six weeks from the beginning of February, demand remains strong with pricing firm and the order book is very strong.’
