Bellway hikes interim dividend 56% after record earnings

LONDON (ShareCast) - Profits at UK housebuilder Bellway (LSE: BWY.L - news) jumped by more than a half to a record in the first six months of its financial year, prompting the company to hike its interim dividend by 56.3%. The company declared a dividend of 25p per share for the first half and said it expects an increase in the final dividend to maintain a full-year dividend cover of around three times.

Pre (Shanghai: 600048.SS - news) -tax profit was up 53.1% at £158.9m in the half year ended 31 January, on revenues that were 18.7% higher at £831.2m as its average selling price improved 3.4% to £219,343.

The group said all of its 15 operating divisions performed well and achieved an average of 139 reservations per week, up from 137 the same time last year, though the pattern of reservations "reverted to the more usual seasonal trend".

Despite wider concerns that the high-growth London market has slowed down, Bellway said conditions in the capital remained "resilient" with housing revenue in the region up 16.4% at £203.2m.

The order book at 8 March was up 35.2% on last year at £1,121.1m.

Chairman John Watson said the company "achieved another tremendous set of results, taking further market share by delivering a growing contribution to the supply of much needed new homes".

He added: "Our strong balance sheet and operational capacity has facilitated significant investment in land over recent years. This investment, together with our expanding divisional structure, has allowed the group to respond to ongoing customer demand, resulting in record half-year earnings and a further significant improvement in return on capital employed." The return on capital employed improved to 22.8% in the first half, up 5.8 percentage points on the same time last year.

The stock was up 2% at 2,045p in early deals on Wednesday.