Bellway PLC Trading Update

 
TIDMBWY 
 
Bellway p.l.c. 
 
                                Trading Update 
 
                            Wednesday 14 June 2017 
 
Bellway is today issuing a trading update in respect of the period from 1 
February to 4 June 2017. 
 
Highlights 
 
  * Sales demand in the period was strong, with a 13% increase in the 
    reservation rate to 221 per week (2016 - 196 per week). 
 
  * The increase in housing completions for the full year to 31 July 2017 is 
    expected to approach 10% (2016 - 8,721), another year of significant volume 
    growth. 
 
  * A robust trading performance should result in an operating margin slightly 
    in excess of 22% (2016 - 22%) for the full financial year. 
 
  * Significant investment in land, with 10,250 plots contracted (2016 - 8,600 
    plots) and all land in place to meet next year's growth target. 
 
  * Value of forward order book of homes due for completion beyond 31 July 2017 
    is ahead at GBP900 million (2016 - GBP846 million). 
 
  * A commitment to customer care has resulted in Bellway regaining its status 
    as a five star housebuilder.* 
 
Ted Ayres, Chief Executive, commented: 
 
"Robust market conditions, together with a clear operational focus, is enabling 
Bellway to continue increasing its contribution to the supply of much needed 
new homes.  We have made a significant investment in land and work in progress 
over a number of years and this, together with a strong balance sheet and 
substantial operational capacity for expansion, should ensure that Bellway is 
well positioned to deliver further volume growth, this year and beyond.  This 
successful implementation of our disciplined growth strategy is leading to 
ongoing enhancements in shareholder value." 
 
Market and current trading 
 
The housing market remains positive and continues to be supported by low 
unemployment, good availability of affordable mortgage finance and the 
continued provision of Help to Buy.  Customer demand for new homes remains 
strong across all regions and has increased throughout Spring, in accordance 
with the usual seasonal trend, unabated by any uncertainty in the weeks 
preceding the recent General Election.  These favourable market conditions, 
together with a 6% increase in the number of active outlets to 237 (2016 - 
223), has led to the Group achieving 221 reservations per week (2016 - 196 per 
week), an increase of almost 13% compared to the same period last year. 
 
As a result of this strong sales performance, together with the substantial 
investment in work in progress, the Board is now confident that volume growth 
should approach 10% for the year ending 31 July 2017, ahead of our original 
target. 
 
At the same time as delivering this growth, Bellway maintains its emphasis on 
build quality, customer care and health and safety.  This sustainable and 
responsible approach to building new homes has resulted in Bellway regaining 
its status as a five star housebuilder, the highest rating achievable and one 
of only two national housebuilders to achieve this accolade.  In addition, ten 
of our site managers have recently received NHBC health and safety awards, 
recognising their success in this important area, with this strong performance 
representing 18% of the total awards issued across the industry. 
 
In line with previous guidance, the Board still expects that the Group will 
achieve an average selling price of around GBP260,000 in the current financial 
year.  The pricing environment remains positive, with modest pricing gains 
being achieved on most new sites brought to the market.  This, together with 
previous investment in higher value locations, should result in further 
improvements to the average selling price, beyond this financial year. 
 
The positive trading environment, together with the Group's strong financial 
disciplines, means that the Board now expects the operating margin for the full 
financial year to be slightly in excess of 22% (2016 - 22%), improving further 
upon last year's record performance. 
 
Land buying and financial position 
 
The strategy of volume growth is supported by the availability of good quality 
land at attractive rates of return and as a result of ongoing investment, 
Bellway has contracted to acquire some 10,250 plots since 1 August 2016 (2016 - 
8,600 plots).  In addition, there are heads of terms agreed, and solicitors 
instructed, to purchase a further 5,500 plots.  Bellway now owns all of the 
land required, with the benefit of a detailed planning permission, in order to 
meet next year's growth target. 
 
Depending upon the timing of land opportunities, the Board expects net bank 
debt to be less than GBP50 million by 31 July 2017. 
 
Outlook 
 
The total order book at 4 June 2017, of which 70% is contracted, stood at 5,819 
homes (5 June 2016 - 5,346 homes) and includes reservations with a value of GBP 
900 million (2016 - GBP846 million) due for completion beyond 31 July 2017.  This 
strong forward sales position not only supports this year's volume growth 
target, but should also ensure that Bellway is well placed to deliver further 
growth next year, subject to market conditions remaining unchanged. 
 
Whilst the outcome of the general election has provided a degree of instability 
with regards to future Government policy, all political parties recognise the 
need for increased housing output.  The Board also remains mindful of the wider 
uncertainty as negotiations to leave the EU commence, however, the Group's 
strong forward order book, consistent capital disciplines and strong 
operational focus should ensure that it is well placed to continue its strategy 
of disciplined volume growth. 
 
* As measured by the Home Builders' Federation Customer Satisfaction survey 
 
FOR FURTHER INFORMATION PLEASE CONTACT: 
 
TED AYRES, CHIEF EXECUTIVE AND KEITH ADEY, FINANCE DIRECTOR FROM 7:00 AM 
ONWARDS ON 0191 217 0717. 
 
Certain statements in this announcement are forward-looking statements which 
are based on Bellway p.l.c.'s expectations, intentions and projections 
regarding its future performance, anticipated events or trends and other 
matters that are not historical facts.  Such forward-looking statements can be 
identified by the fact that they do not relate only to historical or current 
facts.  Forward-looking statements sometimes use words such as 'aim', 
'anticipate', 'target', 'expect', 'estimate', 'intend', 'plan', 'goal', 
'believe', or other words of similar meaning.  These statements are not 
guarantees of future performance and are subject to known and unknown risks, 
uncertainties and other factors that could cause actual results to differ 
materially from those expressed or implied by such forward-looking statements. 
Given these risks and uncertainties, prospective investors are cautioned not to 
place undue reliance on forward-looking statements.  Forward-looking statements 
speak only as of the date of such statements and, except as required by 
applicable law, Bellway p.l.c. undertakes no obligation to update or revise 
publicly any forward-looking statements, whether as a result of new 
information, future events or otherwise. 
 
 
 
END 
 

(END) Dow Jones Newswires

June 14, 2017 02:00 ET (06:00 GMT)