Bellway’s Share Price Fell 2.53% on Its Weak Half-Year Results

The Bellway plc (LON: BWY) share price fell 2.53% after its latest trading update for the six months ended 31 January 2024. The housebuilding company reported housing revenue exceeding £1.25 billion for the period, aligning with the Board's projections and a significant drop from the previous year's £1.8049 billion.

The total number of housing completions reached 4,092 units, compared to 5,695 units in the prior year, with an average sale price of £309,300, slightly down from £316,929.

Despite the challenges, the company maintained stable headline prices, employing specific sales incentives to draw customers and secure bookings. Moreover, the inflation in building costs showed signs of easing during this timeframe.

The rate of private reservations saw a notable increase of 15.4%, rising to 105 per week from the previous year's 91, equating to a weekly rate of 0.43 reservations per outlet, up from 0.38. The overall rate of reservations also experienced a minor increase to 140 per week from 138.

The first half of the year witnessed a decrease in mortgage interest rates, boosting customer inquiries during the typically slow winter. This improved January's private reservation rate to 0.59 per outlet per week, up from 0.45.

Leveraging the recent uptick in customer demand, Bellway has inaugurated 34 new sales outlets and anticipates the launch of over 40 additional outlets in the latter half of the fiscal year.

As of 31 January, the forward order book included 3,970 homes, down from 5,108 homes the previous year, valued at £1.0125 billion, a decrease from £1.3868 billion. This positions the company to aim for a full-year production target of approximately 7,500 homes, adjusting from 10,945 homes as of 31 July 2023, with a significant portion of completions expected in the first half of the 2024 fiscal year.

The Group is optimistically positioned to expand its order book by 31 July 2024, assuming favourable market conditions. This, coupled with the strategy for new site openings, is anticipated to facilitate a recovery in production volumes starting in the 2025 fiscal year.

Bellway share price. 

Bellway share price fell 2.53% to trade at 2750.5p from Thursday’s closing price of 2822.0p.

On Wednesday, analysts at RBC Capital said they don't see a housing market crash in 2024. In fact, the firm believes the early signs point to a recovering housing market in this year, and they expect transaction volumes to rise and mortgage rates to fall.