Bellway hikes dividend, eyes more growth

Published 18th Oct 2011

British homebuilder Bellway Plc (BWY.L) hiked its dividend by nearly a third after posting a 51 percent rise in full-year profit, and is eying further growth in sales as it drives new site openings across the country.

Bellway Chief Executive John Watson said on Tuesday the company had made a good start to its new financial year, with reservations up 11 percent so far.

"It's a steady marketplace and we're glad to see reservations are at least ticking up," Watson told Reuters.

"For us it's about opening new outlets. We will hopefully have another year of higher average selling price and a bit more volume and margin growth," he added. Bellway is targeting a 5 percent increase in the number of sites and sales volumes.

The builder, which operates from over 200 sales outlets in the UK, posted a pretax profit of 67.2 million pounds in the 12 months to end-July, compared with 44.4 million last year.

That was towards the top end of market expectations, which had already edged higher after an upbeat trading update from the company in August. Forecasts ranged between 58 million pounds and 67.7 million, with the average at 63.8 million, according to 18 forecasts on Thomson Reuters I/B/E/S.

But the outlook for the economy remains uncertain. Data last week showed the jobless total hitting a 17-year high, with youth unemployment its highest since records began in 1992.

"The board is confident of delivering these improvements over the next 12 months but, as ever, remains mindful of current economic uncertainties," said Chairman Howard Dawe in a statement.


BIG DISPARITY

Housebuilders have retrenched in recent years as a dearth of mortgages continues to cripple housing sales, also prompting builders to shift their product mix towards more popular family-sized homes.

Housebuilders have also refocused their activities on the more lucrative market in crowded southeast England.

Recent figures show asking prices in the south have risen more than 5 percent since the start of the credit crunch, while falling 9.4 percent in the north, resulting in the biggest disparity between the two regions since records began in August 2002.

Bellway, which operates from 35 sites in and around London, said the majority of its new sites being opened will continue to be in the south. However, it will invest in sites in the north of England when growth returns, with volumes already proving resilient in the northeast and the West Midlands.

"It's a pendulum, when one's up, the other's down. So I'm mentally saying to myself, keep investing in these towns and cities in the north because at some stage, the pendulum will swing," he said.

Shares in Bellway, which said it would increase its final dividend by over 30 percent to 8.8 pence to give a total 12.5p for the year, were up 0.9 percent by 8:50 a.m. BST, outperforming the FTSE midcap index which was down 1.4 percent.

Bellway had said in August the number of completions in the year through July had risen by 7 percent to 4,922, while the average selling price of homes sold rose 7 percent to 175,613 pounds.

Source: ' Reuters '

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