Bellway profits through the roof

HOUSEBUILDER Bellway stormed away in its first six months producing profits well ahead of analysts' forecasts which had been tweaked upwards as recently as February.

Chairman Howard Dawe declared that 2004 would be an historic year for the group and said that despite the recent rise in interest rates trading conditions remained buoyant and the company had already reserved 1000 more homes than it had at this stage last year.

He has no doubts that Bank of England economist Kate Barker's recent report should have a positive impact on the industry over the long term.

In the meantime, Bellway is concentrating its efforts in the middle of the market, avoiding both the cheap and over-expensive ends.

Barely eight months into its financial year Bellway has reserved, contracted or completed 98% of its targeted new homes for the full year. The forward order book for the rest of this year and next stands at £631m, which is a 25% increase over the position this time last year.

Bellway marks its 25th anniversary as a Stock Exchange-listed company this year and will also see the completion and sale of its 100,000th home.

The mood of celebration has been extended to the interim dividend which is being increased by 50% to 9.3p and paid out earnings which jumped 35% to 47.9p per share. But Dawe said that there was no chance that the final dividend would rise by so much and he expected an increase of just 20% for the full year.

Turnover for the six months to end-February rose by 20% to £436.5m, reflecting the completed sales of 2728 homes at an average price of £156,900. That was a 10.4% rise in the number of houses completed and an 8.6% rise in prices over the same period in 2003.

Pre-tax profits jumped by 36% to £77m which was considerably ahead of most analysts' forecasts for the six months.

The group spent £174m during the half on buying land with planning permission and net debt stood at £188m. Its total land bank rose by 1200 plots and now stands at a record 19,600 plots. Another 16,000 plots are expected to receive planning consent soon.

Last week, Bellway announced a joint venture with English Partnerships to develop up to 11,000 homes at Barking Reach in the Thames Gateway. This made it the first housebuilder to receive an urban regeneration grant, an urban development grant and a City grant.

Bellway now trades from 15 different divisions. The new Thames Gateway North Division will make its first contribution to profits in 2005.