Bellway PLC (LSE:BWY) shares fell 6% after the bullish elements of its half-year update were mixed with an acknowledgement that wider economics conditions, most notably mortgage rates and consumer confidence, are likely to determine its full-year results,
Nevertheless, FTSE 250-listed housebuilder said it is “on track” to deliver at least 8,500 homes for its financial year to 31 July, up 7,654 a year earlier, with a lower output in the second half.
“While mortgage interest rates have increased modestly since the autumn, customer demand has remained robust, and the group has a healthy order book to support our targeted growth in volume output for the full year,” said chief executive Jason Honeyman, who also welcomed the government's reforms to the planning system.
It completed 4,577 sales in the six months to 31 January, up 11.9% compared to a year ago, with an average selling price of £310,600 up from just under £309,300.
Bellway recorded 127 private reservations per week in the first half, up from 105 a year earlier when mortgage rates were more elevated, with 0.51 reservations per outlet per week, up from 0.43.
“While we did not experience a typical seasonal step-up in reservations during the autumn, trading was stable throughout the first half and pricing has remained firm across our regions,” it said.
There was a "seasonal pick-up" in customer enquiries and reservation rates in the early weeks of the current spring selling season, but the company acknowledged the sensitivity of customer demand to mortgage affordability and the wider economic backdrop.
At the half-year period, the forward order book stood at 4,726 homes, valued at a total of £1.31 billion, up from 3,970 homes at £1.01 billion.
With net debt of £8 million at the half year and contracts exchanged to buy 5,246 plots of land, Bellway has “a strong balance sheet and land bank, and we remain very well-positioned to capitalise on future growth opportunities while continuing to play an important role in meeting the growing need for new homes across the country,” said Honeyman.
He reiterated full-year guidance for an expected average selling price of around £310,000 and an underlying operating margin to approaching 11.0%, up from 10% last year.