If you are covering Bellway’s latest financial results, please find below a comment from Oli Creasey, head of property research at Quilter Cheviot:
“Bellway’s trading statement this morning shows a company, and housebuilding industry, on the road to recovery, and making steady, albeit relatively slow, progress. The company’s reservation rate increased by 8% year-on-year, though driven entirely by increased bulk sales, with individual reservation rates unchanged. Likewise, while the company’s expectations for the average selling price in 2024/25 has increased by 2% compared to prior guidance, the increase is driven by a change in the mix, with recent buyers showing more interest in larger, more expensive homes, implying that the underlying market value of homes remains largely unchanged. Management has reiterated full year guidance for the operating margin to tick up from 10% last year to a figure “approaching 11%” this year.
“While the update is positive, the changes are relatively modest, and the underlying drivers (more bulk sales, change in the mix) are not ones that typically support margin expansion. The company has guided to volume between 8,600-8,700 for the full year, which is a modest increase to prior guidance. This represents a 13% year-on-year increase – and while a clear improvement, it will still leave the company c.20% below volumes from the peak years in 2022/2023. Similarly, the company is some way off the 18.5% operating margin achieved in 2022.
“Management and shareholders will be pleased to see the company’s figures continue to in the right direction, but should remain mindful of the long recovery path still ahead.”
