Home builder Bellway Plc (BWY.L), Friday, in its trading update for the first six months ended January 31, said it expects trading conditions during the first half of 2010 to be subdued relative to historic levels, with mortgage providers continuing to require a high level of deposit, particularly for first time buyers.
The New Castle, UK-based company noted that, historically, there is always an uplift in weekly home reservations as traditional spring selling season unfolds.
In the first-half period, Bellway completed selling 2,247 homes compared to 2,014 homes in the previous-year period, at an average selling price of GBP 156 thousand versus GBP 156.15 thousand a year earlier. Six-month operating margin was about 6%, compared to 9.2% before exceptional items in the prior year.
At January 31, Bellway's order book stood at GBP 390 million as compared with GBP 296 million in the same period last year, representing 2,506 homes versus 2,173 homes in the 2009-year period, of which 706 homes are for the following financial year.
Currently, the group has sold or reserved 92% of this year's current target. The company noted that the next six weeks' reservation pattern will determine whether this target will be raised. Reservations in the 2010 first half have averaged 85 per week versus 65 in the year-ago period.
Looking ahead to full year 2010, Bellway expects margin to be at the higher end of 6% to 7% range. The company also anticipates that there will be no exceptional items included in its interim results. In the prior year, the company recorded exceptional items totaling GBP 66.3 million.
Since the beginning of the financial year, the company has spent nearly GBP 76 million on land, mainly in south and also has terms agreed on a further GBP 123 million.
Bellway noted that, as new planning permissions are granted, its divisions are gradually opening up more sites and the company expects this to result in an increase in the number of sales outlets to approximately 190 by the year end as compared to an average of 175 in the first six months. Bellway intends to announce its interim results for the first half of the year on March 24.
For fiscal 2009, Bellway reported a loss of GBP 27.44 million or 23.9 pence per share, compared to a profit of GBP 27 million or 23.5 pence per share last year. Excluding exceptional items, profit was GBP 20.30 million or 17.6 pence per share, a sharp decline from GBP 119.51 million or 104.1 pence per share in the prior year. Full year revenues slumped to GBP 683.81 million from GBP 1.15 billion a year ago.
In Friday's regular trading session, BWY is trading on the London Stock Exchange at 746.50 pence per share, down 14.00 pence or 1.84%, on a volume of 70,133 shares. In the past 52-week period, the stock has been trading in a range of 543.00 pence to 927.50 pence.
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