13 June 2023
If you are covering Bellway’s latest trading statement, please find below a comment from Oli Creasey, equity research analyst at Quilter Cheviot:
“Not much has changed for Bellway since it reported its half year results, and management have reiterated core guidance for the full year: 11,000 completions, slightly down on 2022, and an average sale price of £300k. That sale price is -5% compared to the average for 2022, and the average in the first half of the year, but this fall in sale price is largely driven by a change in house types being sold (ie: more social houses) rather than a significant fall in house prices overall.
“However, despite trading holding up fairly well, like the rest of the housebuilding industry Bellway has suffered at the hands of the current economic picture. Management have reported a private sale rate of approximately 0.6x per week – lower than the long-term average (which is around 0.85x) but in-line with recent results from peers. With mortgage rates once again ticking up, it remains an uncertain period, but demand for new homes still remains as present as ever.
“Bellway has beaten expectations regarding its balance sheet, with the forecast that the company will end FY’23 with around £200m of cash on the balance sheet being ahead of analyst’s expectations. This is despite the company paying a 45p dividend in early July and continuing with a £100m share buyback programme, £44m of which has been spent so far. As such, Bellway remains a well-capitalised business with the ability to get through this tough period and take advantage when the economic picture does improve.”
