Bellway Shares Flat as Order Book Shrinks Despite Volume Beat

Bellway (LON: BWY), the Newcastle-based housebuilder, said completions rose 10.8% to 9,695 homes in the year to 31 July, beating its own guidance of 9,300 to 9,500 homes. Shares were little changed on the update.

The stock traded at 2,090p on Tuesday, down 0.5% from Monday’s close of 2,100p, having ranged between 2,066p and 2,112p intraday. The muted move followed a pre-market trading statement rather than a rally on the volume beat.

Bellway’s trading update, released via RNS earlier today, showed underlying operating profit of around £320m, up from £303.5m a year earlier, alongside housing revenue up over 13% to £3.14bn. Chief executive Jason Honeyman said the group had delivered a robust performance and growth in volume output despite ongoing industry headwinds, adding that a sharp focus on operational improvement and capital efficiency had supported a strong rise in cash generation and shareholder returns.

The volume gain came largely from bulk sales, block deals typically made to housing associations or investors at lower margins than individual retail sales, which pulled the adjusted operating margin down to around 10% from 10.9%. The forward order book, the value of homes reserved but not yet legally completed, fell to £1,197.2m across 4,206 homes, down from £1,519.4m and 5,307 homes a year earlier. Net cash rose to £157.7m from £41.8m, with adjusted gearing under 5%, funding a near-complete £150m buyback and a new £50m buyback for the coming year.

Mr Honeyman used the update to call on the government for an immediate stamp duty cut and a deposit support scheme for first-time buyers, framing demand conditions heading into the new financial year as uncertain. That call, alongside the shrinking order book, appears to explain why markets treated the completions beat cautiously rather than rewarding it.

Bellway will confirm its full shareholder return plans for the new financial year alongside full-year results on 13 October.