Bellway builds more home and cash despite tough market

Bellway PLC (LSE:BWY) has delivered a stronger-than-expected year, with housing completions up 10.8% and operating cash flow beating its previous guidance. The housebuilder completed 9,695 homes in the year to 31 July, ahead of its 9,300 to 9,500 target and up from 8,749 a year earlier. The better-than-expected performance was mainly driven by strong conversion from its bulk sales pipeline. Housing revenue climbed more than 13% to £3.14 billion, while adjusted operating profit is expected to reach around £320 million, up from £303.5 million last year. The expected operating margin is around 10%, however, down from 10.9%, reflecting a higher proportion of lower-margin bulk sales. The average selling price rose to around £324,000 from £316,412, although Bellway said this was down to geographic and product mix rather than underlying house price inflation. Customer demand remains more mixed. Private reservations slipped to 0.55 per outlet per week from 0.57, while the rate excluding bulk sales fell to 0.49 from 0.52. Demand picked up early in the spring selling season before cooling from April as mortgage rates moved higher. The forward order book also shrank, with 4,206 homes worth £1.20 billion at the end of July, compared with 5,307 homes worth £1.52 billion a year earlier. Still, Bellway made significant progress on cash generation. Adjusted operating cash flow jumped to more than £850 million, comfortably ahead of its previous £750 million to £800 million guidance. Net cash stood at £157.7 million, up sharply from £41.8 million, while adjusted gearing f...