Record cash generation and a bigger buyback couldn't offset a cautious outlook as Bellway warned of fewer completions next year.
Bellway (LSE: BWY) reported higher profit and stepped-up shareholder returns for the year to 31 July, but shares were little changed as the housebuilder flagged a weaker outlook for 2027 completions.
Investors appeared to look past a strong set of annual results to focus on the softer order book and subdued reservations, with the shares barely moving despite the improved numbers, as buyers continue to be squeezed by high mortgage rates and economic uncertainty.
Completions rose 11% to 9,695 homes, driving a 14% increase in revenue to £3.16bn and lifting underlying pre-tax profit 6% to £305.7m. Operating cash flow jumped 36%, leaving the group with net cash of £157.7m and very low gearing, underpinning a 7% rise in the dividend to 75p alongside a new £150m share buyback, taking total returns to shareholders over two years to around £450m.
The sting in the tail was guidance for 2027, with Bellway now expecting completions of between 9,000 and 9,400 homes, down on the year just reported, with a greater proportion coming from lower-margin bulk sales. Underlying operating margin, already down to 10.1%, is expected to narrow further as build cost inflation runs at 3% to 4% and reservations remain subdued.
Bellway said its strong balance sheet and land bank leave it well positioned to grow again once market conditions improve, and it welcomed the government's newly proposed scheme to support first-time buyers. For now, though, investors are being asked to take that promise on trust, with the forward order book and mortgage-rate backdrop still the key swing factors for the shares.
This report is based on Bellway’s announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full markets calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: Avel Chuklanov on Unsplash.
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