Bellway profits soar on back of strong housing demand

Guy Bentley
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The numbers

Homebuilder Bellway has reported a jump in profit before tax of 53 per cent to £159m for the half year ended 31 January. Revenue climbed 18.7 per cent to £831.2m. In good news for shareholders, dividends per share soared 56 per cent to 25p. Completions for the period rose 15.7 per cent from the same period in 2014 to 3,754.

Why it's interesting

Bellway has been on a winning streak, recording a record annual profit last year followed by an upbeat trading update in February. The UK still has a hot property market. Bellway has upped the number of homes it's building, and the average selling price continues to rise.

Demand for new homes is strong throughout much of the UK and all of Bellway's 15 operating divisions performed well. The government's controversial Help to Buy scheme remains an "important initiative for the house building industry", according to Bellway. George Osborne's policy to help first-time buyers is currently the "only widely accessible and cost effective option for those customers with a deposit of five per cent".

Broker Numis commented on the results:

Overall, this is a very strong update and the fact the group has seen an increase in its order book since the last update, shows it is selling faster than it is completing. This bodes well for the group's ambitions of long term volume growth.

What Bellway said

Commenting on the results, chairman, John Watson, said:

Bellway has achieved another tremendous set of results, taking further market share by delivering a growing contribution to the supply of much needed new homes.

Our strong balance sheet and operational capacity has facilitated significant investment in land over recent years. This investment, together with our expanding divisional structure, has allowed the Group to respond to ongoing customer demand, resulting in record half year earnings and a further significant improvement in return on capital employed.

In short

Bellway has delivered on its promises of strong growth and given the pricing environment it remains on course for continued success. However, house prices have moderated from the rapid growth seen last year. This is all to the good and gives Bellway a more sustainable outlook particularly in London and the south east.

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