Bellway hikes divi as profits surge

Bellway, the house builder listed on the FTSE 250, reported a massive jump in profits in its first half, leading to a 50 per cent jump in the interim dividend.

Revenue increased by 9.6% in the six months to January 31st to £502.5m, from £458.6m the year before, as the company reported a 5.8% increase in the number of homes completed to 2,597.

The firm said that demand remained strongest in the south which accounted for 51% of its legal completions, though its "wide geographic coverage" allowed it to benefit from an improvement up north.

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The average selling price of all homes sold increased from £182,753 to £187,426, mainly from the continuing changes in product mix. However, London boroughs registered a higher average price of £214,072.

With the operating margin improving from 10.1% to 12.8% year-on-year - helped by cost control and a greater proportion of completions from newly acquired land - profit before tax surged by 47.5% from £40.6m to £59.9m and earnings per share jumped 50.4% to 37.9p.

"The group has delivered another strong set of results, having achieved further growth in volume, average selling price and operating margin and this has contributed to an improvement in return on capital employed," said Chairman John Watson.

As such, the dividend at the half-year stage was hiked by 50% to 9.0p per share, up from 6.0p and the half last year.

"These results have delivered further value creation for shareholders through growth in net asset value, together with a continuation of progressive dividend payments," Watson said.

Outlook optimistic as reservations increaseReservations rose to an average of 97 per week during the the first half, up from 89 previously, helped by government incentives such as the NewBuy and MI New Home schemes which accounted for 11% of reservations taken during the period.

However, in the six weeks since February 1st, reservations have jumped to 133 per week (120 the year before), meaning that Bellway has reserved or legally completed 94% of its current full-year volume target.

The company said that the availability of affordable, higher loan-to-value mortgage products has remained a constraint that has tempered consumer demand.

"The board welcomes the recently announced budget measures to support the housing market.Whilst it is too early to assess the effect these measures may have, we remain hopeful that they will lead to improvements in mortgage accessibility."