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Buoyant Bellway on track to build 10,000 new homes

For the six months to the end of January, it built 4,741 units
builder on unfinished roof
The order book at March 11 was around 8% ahead of this time last year at just over £1.5bn

Newcastle-based builder Bellway Homes PLC (LON:BWY) gave an upbeat assessment of its prospects as it told investors it was on track to build 10,000 houses this year – a new record.

For the six months to the end of January, it built 4,741 units, a year-on-year rise of 6.3%, while the average selling price grew by 7.7% to £275,945.

READ: Bellway's strong update prompts upgrade from Numis Securities

This strong showing was behind a 16.6% rise in pre-tax profits to £288.7mln.

Investors were rewarded with a 48p a share half-time dividend, up 28%.

Boss John Watson said the government's Help to Buy scheme had been "an important selling tool", with almost 40% of purchasers using it.

The order book at March 11 was around 8% ahead of this time last year at just over £1.5bn

“Beyond this financial year, Bellway has significant capacity for further growth, both from its existing divisional structure and through the opening of new divisions in areas with high demand,” Watson told investors.

“Whilst pursuing this disciplined growth strategy, the group will continue its focus on build quality and customer care, whilst maintaining strict capital disciplines, in order to deliver enhanced returns to shareholders.”

Shares higher

In early afternoon trading, Bellway shares on the FTSE 250 index were 3.2% higher at 3,146p.

Russ Mould, investment director at AJ Bell commented: “There are few surprises in first half results from Bellway although a healthy increase in the dividend and a modest beat on profit helps to push up the share price.

“Although the company achieved an 8% increase in selling prices in the period, this looks unlikely to continue against the backdrop of a cooling housing market.”

He added: “Future profit growth is likely to be dependent on increasing volumes rather than house price inflation.

“Bellway has a solid track record in this regard but there are execution risks and planning issues to overcome in ramping up output of homes – its rival Berkeley recently noted the operating environment did not support a step-up in production levels.”

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