Housebuilder reports strong full year profit and “stable” but fragile autumn sales

Real-time Share Price
Real-time Share Price

Housebuilder Bellway has reported full year pre-tax profit up by more than half to £67m on the back of both rising house sales and higher house prices.

The Newcastle-based builder said revenue for the year to 31 July increased by 15% from £768m to £886m as it opened more sites and built larger homes for sale at higher prices. At the same time it announced that long-time finance director Alistair Leitch will retire from the firm at the end of January 2012, to be replaced by 32-year old group chief accountant Keith Adey.

The firm also said that the first nine weeks of the new financial year had traded ahead of 2010, with reservations 11% ahead of the same period last year, although said the market remained fragile.

Leitch said the firm had averaged 85 sales a week since the year end, up from 77 last year, but remained concerned the strong sales will not last. He said: “We see stability in the market, but we’re concerned. We have to ask how long it will last. At the start of each week we’re wondering how we’ll make those sales again the next week. It’s that fragile, but at the moment there are no alarm bells.”

Leitch said that if the market did continue at the current level, Bellway will see further growth in sales of approximately 5% in 2012, and further average sales price increases of a similar amount.

Leitch’s comments contrast with statements made by Redrow chair Steve Morgan and Crest Nicholson chief executive Stephen Stone last week, who said there had been no significant upturn in the traditional autumn selling season.

Bellway increased its profit margins in the year on the back of continuing to hold down construction prices. It said it had reduced construction costs by 8% in the last three years, and expected to be able to keep prices stable in 2012. Leitch said: “We’re not trying to screw down subcontractors, but as we are able to offer a decent forward order book of stable work, our suppliers are able to price accordingly.”

Leitch said he had decided to retire as part of a long-planned succession strategy at the housebuilder.