11 February 2025
If you are covering Bellway's latest trading update, please see the following comments from Oli Creasey, property analyst at Quilter Cheviot:
"Much like the rest of the housing sector, Bellway appears to be in the early stages of recovery after what has been a challenging period. This morning’s trading statement for the six months ending January 2025 shows its sales volumes have increased by 12% compared to the same period last year, and the company is on track to hit full year volume guidance, which would mean 11% growth year-on-year.
"Management anticipates a modest seasonal change in volumes in the second half of the financial year but is still seeing improving conditions, with the company’s forward order book also substantially bigger than this time last year, up 30% in value.
"Bellway’s house prices have remained broadly flat throughout the past year, up by around 0.5%, which is a little behind some peers, including Persimmon which reported 5% growth. The company’s outlook is for sale prices to continue at the same levels for the rest of the financial year, and for its operating margin to improve modestly from 10% to 11%. While this improvement is incrementally positive, it represents the scale of the challenge that Bellway and other housebuilders face; given the company’s operating margin in 2022 was around 18%, there is still a long way to go before we can say the business or industry has fully recovered. Likewise, while Bellway’s volumes are improving, they are still down by around 25% compared to the 2022 peak.
"Management noted that customer enquiries and reservation rates have been encouraging in the current selling season. However, the mortgage market and wider economic conditions continue to have an impact on customer demand and are likely to be a headwind for Bellway for some time yet."
