Bellway sees margin growth

Housebuilder Bellway has continued to deliver its strategy of increasing volumes, raising average selling prices through changes in mix and achieving margin growth during the period from 1 August to 30 November 2011.

The firm said visitor levels and reservations have been "remarkably resilient", with the latter having increased by some 14% compared to the same period last year. The average selling price of the reservations has increased by almost 7%.

The order book grew from £440m to £458m by the end of the period, with the group securing 73% of its current annual target.

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In a statement the firm said: "The group continues to utilise a variety of incentives to secure sales, however encouragingly, the use of shared equity as an incentive has reduced to less than 5% of reservations in the period compared to 10% last year. In contrast the part exchange of customers' existing homes is used in an increasing number of transactions."

"Notwithstanding the current backdrop of global and domestic economic uncertainty, Bellway is well positioned to continue its three pronged strategy of volume, average selling price and operating margin growth."

The firm has continue to invest in land, spending £71m on land and land creditors and contracted to acquire around 1,400 plots in the period, which has resulted in net debt of £17m.

The board said it anticipates that legal completions for the six months ending 31 January 2012 will increase by around 5% and that the operating margin for the same period will be at least in line with that achieved in the second half of the previous financial year of just under 10%.

A £150m bi-lateral banking facility has been renewed, meaning Bellway now has combined facilities of £300m which the company believes will provide "funding certainty in the current climate of volatile debt markets".

"The outcome for the full year will be dependent primarily upon consumer confidence, especially during the spring selling season," the firm warned.

NR