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Housebuilder Bellway resuming dividends on record orders

Tom Belger
·Finance and policy reporter
·2-min read
A general view of Bellway homes housing development in Cannock, West Midlands.
A Bellway Homes housing development in Cannock, West Midlands. Photo: PA

The housebuilder Bellway (BWY.L) has announced plans to resume dividend payments after its order book hit a record high, in the latest sign of the boom in Britain’s property market.

The payments to shareholders come in spite of steep declines in sales and profits over its financial year to the end of July, with the company “significantly affected” by COVID-19’s impact on property and construction earlier this year.

Revenue was down 30.7% to £2.23bn ($2.9bn), the first decline in a decade, and operating profit before exceptional items down 52.3% to £321.7m.

The number of homes completed dropped from 10,892 a year ago to 7,522 this year, according to preliminary results published on Tuesday.

READ MORE: UK property sellers ‘too optimistic’ as asking prices hit record high

Bellway also booked £25.8m in exceptional COVID-19 costs, including from interruption to construction work during the first national lockdown and several “aborted land deals.”

It set aside a further £46.8m to “help owners of legacy apartment schemes undertake fire safety improvements.”

But its forward order book stood at a record high £1.87bn at the start of October, with reservations up by 30.6% year-on-year.

“Productivity levels are improving and are currently between 85% and 90% of those achieved in the year ended 31 July 2019,” it said.

READ MORE: Estate agents expect prices to be higher in a year despite crisis

“Aside from the risk of a further, widespread national 'lockdown', this should help the Group complete the sale of around 9,000 homes at an expected average selling price of around £290,000 for the year ending 31 July 2021.”

The board is now proposing a final dividend after cancelling its interim dividend earlier this year, albeit at 50p per share, half last year’s level.

“This will continue Bellway's unbroken record of annual dividend payments, which was also maintained throughout the global financial crisis of 2008 to 2009, while retaining the underlying strength of the group's balance sheet.”

The UK property boom since the market re-opened earlier this year has continued in spite of the resurgent coronavirus, tighter lockdown restrictions, rising unemployment and Brexit uncertainty, with some experts calling it a “paradox.”

Stamp duty cuts, pent-up demand since the first nationwide lockdown and new interest in moving are widely seen to be fuelling the market, while mortgage holidays, low interest rates and the furlough scheme have limited the hit from COVID-19 and government restrictions.

Bellway shares were up 1.2% on Tuesday morning.

WATCH: What do stamp duty cuts mean for buyers and prices now and next year?