Newcastle-based housebuilder Bellway has increased its half-year operating profit by more than 50% as the boom in the construction industry shows no sign of slowing.
The company said robust demand for new homes throughout the country, the Government’s Help to Buy scheme and a continued focus on growth has led to the positive interim results for the six months ended January 31, which showed profit rising to £165.7m from £109m in the comparable period the previous year.
Revenue rose 18.7%, from £700.4m to £831.2m, while home completions grew 15.7% to 3,754.
A total of £355m was also spent on land opportunities with attractive margins - up from £240m - boosting Bellway’s owned and controlled land bank to 35,837 plots.
Company chairman John Watson said: “Bellway has achieved another tremendous set of results, taking further market share by delivering a growing contribution to the supply of much needed new homes.
“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.”
He added that the group’s strategy of volume growth with a focus on return on capital employed had continued to deliver substantial value for shareholders with a further enhancement in the net asset value.
Starting life in Newastle as John T. Bell & Sons in 1946, Bellway has grown into a national housebuilder, employing around 2,200 people.
London remains a serious market for the business, but significant investment is still being made in North East projects, with sites at Walker, Hebburn, Wallsend, Teesside and Washington being among those acquired during the period covered by the results.
In the South West, meanwhile, Bellway opened its 16th operating division to deliver new homes primarily in and around the Bristol area.
Chief executive Ted Ayres said it was particularly pleasing that volume growth had resulted in earnings per share growing by 56.1% to 103.5p, with return on capital employed increasing 580 basis points to 22.8%.
Bellway’s order book - which stood at £1.12bn on March 8 compared to £829.5m a year previously - was also encouraging.
“The strength of the spring selling season and the effect of the general election in May will, in part, determine the rate of growth of the business in the second half,” he said.
“However, this strong forward sales position should enable the group to achieve volume growth in excess of 10% in the current financial year.”
He added that the housing industry as a whole was “in a bit of a sweet spot.”.
“There is a lot of political will for housebuilding to succeed,” he said.
“We have an election coming up in May and, while Labour or the Liberal Democrats could potentially make some tweaks to initiatives like Help to Buy, the schemes will remain.
“There is support across the major parties and we also have a situation where supply is not quite meeting demand.”
Bellway has followed fellow housebuilders Persimmon and Barratt in announcing bumper results.