Bellway saw profits surge by 50 per cent as the housing market returned to a “more typical cycle” in the last year, the house builder said this morning.
Reporting its preliminary results for the year ended 31 July 2011, Bellway said it will continue its “three-pronged” strategy of chasing volume, increasing average selling prices and operating margin.
Turnover rose 15 per cent to £886.1 million, from £768.3m last year, with profit before taxation of £67.2m, up from £44.4m. Average prices rose to £175,613, from £163,175 last year, with completed sales of 4,922 homes, compared with 4,595.
Back in December, the firm predicted a 20 per cent rise in profits.
The group said its average weekly reservation rate rose during the early part of 2011 and did not fall until the summer months, thereby “returning to a typical pattern for a normal housing market”. The order book at 30 September was £418.8m, compared with £396.7m in 2010.
Chairman Howard Dawe said: “Bellway aims to continue to increase both volumes and average selling prices, the latter by way of ongoing changes in the product mix. This, combined with the improvement in the operating margin, should ensure that shareholder value continues to be enhanced.”
Although with a strong base in London, where the firm operates from about 35 sites, the company said there are “many areas throughout the rest of the country where activity has also been encouraging”. It questioned talk of a north/south divide, saying its six northern divisions legally completed 2,345 homes, an increase of 18 per cent compared to the previous year.
The operating margin also continued to improve, up to 8.5 per cent from 6.7 per cent in the prior year. The firm said labour rates vary by region, and while production of new homes across the UK remains low, competition for work remains high among sub-contractors and suppliers, with most materials negotiated on a fixed price basis.
Earnings per ordinary share were 41.5p, up from 29.7p, and the final dividend for the year increased 30 per cent to 8.8p, compared with 6.7p last year.