Bellway shrugs off Brexit vote

The FTSE 250 housebuilder Bellway has moved to boost its dividend by a higher than expected 40 per cent as it reported annual results seemingly untouched by the UK’s vote to leave the EU.

The UK’s fourth-largest housebuilder by output on Tuesday said reservations since the June 23 referendum had been higher than during the same period last year. The Brexit vote prompted a large drop in the share prices of construction groups, as investors fretted over the impact of the result on the property sector.

Bellway is recommending a final dividend of 74p a share, bringing the total for the year to 108p, 40 per cent higher than a year ago.

Ted Ayres, chief executive, said: “Post-Brexit, particularly with the share price activity and with memories of 2008, we thought ‘Are we in for a rough ride here?’ But I’m pleased to say it’s been quite robust.

“Our sales rates overall have been up post-Brexit and the market has been strong. The buying public seem to be carrying on with life as normal.”

Reservations between the June 23 vote and July 31, the end of Bellway’s financial year, rose 13 per cent compared with 2015, with cancellations factored in, the group said.

In the year to the end of July, Bellway increased operating profit by 36.5 per cent to £492m, on revenues of £2.2bn — 26.9 per cent up on a year earlier.

The Newcastle-based group sold a record 8,721 homes during the year, a 12.5 per cent increase on 2015, while its average selling price rose 12.9 per cent to £252,793.

“We’ve still got to be cautious moving forward — leading economists are suggesting there will be a ‘bite’ to Brexit,” Mr Ayres said. But he added that it was likely the company would increase output further in this financial year.

Bellway shrugs off Brexit vote

Reservations between the June 23 Brexit vote and July 31 rose 13 per cent year on year

Bellway held back from buying large tranches of land over the summer as it waited to see the referendum’s impact but has now resumed land buying, Mr Ayres said.

The housebuilder is “well placed to deliver volume growth over the coming years, which could offset weaker trading conditions that may emerge if the rate of growth in the economy slows”, said Charlie Campbell, analyst at Liberum.

Across the UK, mortgage approvals hit an 18-month low in August, suggesting a slowdown in the broader housing market, which has been especially evident in London. But that does not so far appear to have affected most housebuilders, which receive government support through the Help to Buy equity loan scheme.

Bellway’s shares closed up 6 per cent in London trading at £23.86, but remain 15.9 per cent below the pre-referendum price.

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Bellway shrugs off Brexit vote
BDC October 2022 issue - 297

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