Housebuilder Bellway (BWY) expects “the reduction to a consistent, underlying operating margin will be more pronounced” in the current financial year. In plain English, that means around 19 per cent, down from the 21 per cent posted in the 12 months to July 2019, and 22.1 per cent in FY2018.
Investors have had fair warning. The 214 completions at Nine Elms – which at an average selling price of £820,467 queers Bellway’s pitch that “new homes remain affordable in a historical context” – are among the development’s final sales, and so won’t be repeated. Flat sales prices across the UK provide one cap to operational gearing; cost pressures the other.
However, the negative market price reaction to full-year figures requires two caveats. The first is the shares’ strong recent performance on the prospect of a Brexit deal, which pushed the stock to its highest absolute level since the start of 2018. The second is the latest reading on those rising build costs, which finance director Keith Adey thinks has started to moderate. In uncertain times, suppliers like to keep their order books full, too.
Mr Adey was also unfazed by the drop in the proportion of sales supported by the government’s Help to Buy scheme, the rules for which are set to change in 2021.
Analysts at Numis expect earnings of 419p per share in the year to July 2020.
| BELLWAY (BWY) | ||||
| ORD PRICE: | 3,235p | MARKET VALUE: | £3.98bn | |
| TOUCH: | 3,231-3,238p | 12-MONTH HIGH: | 3,562p | LOW: 2,407p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 2,372p | NET CASH: | £201m | |
| Year to 31 Jul | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 1.77 | 354 | 232 | 77 |
| 2016 | 2.24 | 498 | 329 | 108 |
| 2017 | 2.56 | 561 | 371 | 122 |
| 2018 | 2.96 | 641 | 423 | 143 |
| 2019 | 3.21 | 663 | 438 | 150 |
| % change | +9 | +3 | +3 | +5 |
| Ex-div: | 28 Nov | |||
| Payment: | 8 Jan | |||
