28 March 2023
If you are covering Bellway’s latest results, please find below a comment from Oli Creasey, equity research analyst at Quilter Cheviot:
“Following a previous trading statement, there were few surprises in Bellway’s half year results this morning, and revenue, profit and margin were all in line with consensus (revenue flat year-on-year, though margin is slightly down).
“The company has reported similar experiences to peers – with volumes down sharply in Q4’22, and recovering into Q1’23, although far from recovered. Management note that private reservation rates in February and March are still -44% below the equivalent figure in 2022, which is coincidentally the same number for the half year overall as well.
“Where Bellway has had success is in an expanding social building programme. Despite private reservations being down sharply, we estimate that social volumes have increased +17% over the year, meaning the overall impact is only -32%. Management expect that prior guidance of 11,000 homes sold in this financial year can still be achieved if the company continues to sell at the current rate (which seems a fair assumption to us).
“Most interesting is the slightly surprising decision by the company to return capital to shareholders via a £100m share buyback over the course of 2023. We would expect this to have a positive impact on the share price, and is a sign of relative strength, along with the reiterated intention to pay a 140p full year dividend. Importantly, the company has the cash to make the return – net cash increased c.£100m since January last year.”
