Bellway cautions over Brexit threat after posting profits hike
Housebuilder Bellway has shrugged off easing property prices and surging costs to post a hike in profits, but cautioned over a Brexit risk to the peak selling season.
Bellway reported a 14.3% rise in pre-tax profits to £641.1m (€727.7m) for the year to July 31.
It said revenues lifted 15.6% to £2.96bn (€3.4bn) over the year, while average selling prices for private homes rose by 9.3% to £323,426 (€367,125).
But Newcastle-based Bellway reiterated warnings that house price growth has "moderated" and Brexit could hit demand.
Jason Honeyman, Bellway's newly appointed chief executive, said: "The board are mindful that the forthcoming exit from the EU in March could pose a threat to consumer confidence during the busy spring selling season."
The group's shares were knocked in August when it revealed dampened house price growth.
In its full-year results, the group said that this, together with higher costs, was taking its toll on profit margins, while demand has been "less pronounced at the higher end of the market".
It said: "As the year has progressed, the rate of house price inflation has moderated, although it is still running ahead of cost increases.
"Nevertheless, the net inflationary enhancement to the margin, which has augmented results over recent years, is beginning to abate."
The group has launched a raft of measures to help offset soaring costs of labour and materials in the sector, including a new lower costs build range, called the Artisan Collection, and an overhaul of suppliers and IT changes to target savings.
Despite easing house price growth and demand for more expensive properties across the sector, Bellway said trading remained "solid" in the first nine weeks of the new financial year.
It has had 176 reservations per week, up 2.9% year on year, while its order book was "healthy" at 4,841 homes, up 6.9% on a year earlier.
The group's annual figures confirm it sold 10,307 homes during the year, the first time the company has sold more than 10,000.
Shares in Bellway lifted 2% after the results.
James Beard, an analyst at Numis Securities, said: "Bellway's results show the group's conservative approach to guidance, the benefits of past investment and its positioning at the affordable end of the housing market is bearing fruit and underpinning estimates."
