Market Reaction – Bellway
- Mickey Perry
- Feb 9, 2024
- 2 min read
Publish Date: Friday 9 February 2024
Time Period: Six months ended 31 January 2024
- Housing Revenue: Over £1.25 billion, in line with Board's expectations (2023 - £1,804.9 million).
- Housing Completions: 4,092 homes, a decrease from 5,695 homes in 2023, with an average selling price of £309,300 (2023 - £316,929).
- Sales and Pricing: Private reservation rate increased by 15.4% to 105 per week (2023 - 91), with overall reservation rate slightly up to 140 per week (2023 - 138). Firm headline pricing maintained with targeted sales incentives.
- Market Conditions: Encouraging customer enquiries and private reservation rates, especially in January 2024, influenced by reduced mortgage interest rates.
- New Outlets: 34 new outlets opened, with plans for over 40 additional new outlets in H2, supporting future volume recovery.
- Forward Order Book: At 31 January 2024, comprised 3,970 homes (2023 - 5,108 homes) valued at £1,012.5 million (2023 - £1,386.8 million).
- Financial Position: Net cash of £77 million (2023 - £292.5 million) with low adjusted gearing of 5% (2023 - 2.3%).
- Land Investment: Cautious approach maintained, with 1,237 plots across 9 sites contracted for purchase.
- Building Safety: Over £120 million spent on legacy building safety issues, with ongoing remediation efforts.
- Outlook: Full-year volume output expected around 7,500 homes (31 July 2023 - 10,945 homes), with stable market conditions anticipated to support order book growth and a return to growth from FY 2025.
Jason Honeyman, Group Chief Executive:
"While the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates through the first half has eased affordability constraints and we are encouraged by the seasonal pickup in customer leads and an improvement in reservations since the start of the new calendar year."
1 Day Chart
Chart – October 2023 to Now
Bellway experienced some fluctuations in share price this morning, but the trading update did not significantly change its position. The company has been outperforming many of its peers since October 2023.
The trading update brought some positive, or at least confirming, news. Sales volumes are showing signs of recovery, albeit slowly, and while there has been a decrease in average selling prices, the reduction has not been significant. Bellway has resumed acquiring land, though at a modest rate.
UK housebuilders witnessed notable share price increases in November and December, influenced by market expectations of peak inflation and interest rates. However, there has been a halt in movement as the market awaits potential reductions in interest rates. The sector is likely to see upward movement with further positive news on sales volumes or definitive data on interest rate trends. Overall, my outlook for the sector is positive, with expectations for a revival in housing market volumes during 2024.
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