Bellway reinstates dividend amid record home sales

Newcastle-based house building giant Bellway said on Wednesday its interim dividend has been reinstated at 35p per share as it reported first-half results showing volume growth of 6.3% to a record 5,656 homes at the half year.

For the full year, Bellway said it now expects to complete the sale of around 10,000 homes, up from 7,522 in the previous year.

First-half revenue rose 11.6% to £1.72 billion and profit before tax slipped 4% to £280.2 million.

Bellway said its forward order book at March 14 up 8.4% at £1.64 billion, comprising 6,028 homes (8 March 2020 – 5,772 homes).

Average selling price growth was 5.8%, rising to £303,206.

Bellway chairman Paul Hampden Smith, said: “Bellway has delivered a good first half trading performance, achieving record first half revenue because of its strong brought forward sales position and investment in work-in-progress …

As a responsible developer, Bellway recognises concerns with regards to fire safety in apartment buildings. 

“As part of our efforts to help building owners of legacy apartment schemes, we have recognised an additional net legacy building safety expense of £20.3 million in the period. 

“This brings the total amount provided by the group since 2017, in relation to fire safety, to £131.6 million. 

“This is a substantial sum which demonstrates Bellway’s responsible approach to supporting customers with regards to this issue …

“As the country prepares to emerge from the latest national ‘lockdown’, Bellway is in an excellent position to continue its long-term, disciplined growth strategy …”

AJ Bell Investment Director Russ Mould said: “The return of a first-half dividend at Bellway is the latest example of how rapidly the housing sector has rebounded from the pandemic.

“Put in deep freeze a little under a year ago as the first set of coronavirus restrictions were imposed, the Government has done the equivalent of slapping the housing market in the microwave to defrost it rather than leaving it to one side to slowly thaw out.

“Measures like the stamp duty holiday, a new mortgage guarantee scheme and the continuing influence of Help to Buy, coupled with pent-up demand and a lockdown-induced realisation for many people that they wanted more space in different surroundings has helped super-charge demand.

“This explains how Bellway completed the sale of a record number of homes in the six months to 31 January 2021, though a modest drop in pre-tax profit demonstrates how extra Covid-related costs ate into its significantly higher revenue.

“Bellway has continued to take advantage of depressed valuations on land by buying up plots for development. This investment should pay off down the line.

“Fairly bullish expectations for the rest of the year are underpinned by a strong forward order book and a robust balance sheet.”