UPDATE: Bellway Upbeat Despite 'Slight' Drop In Sales Rate

15th Jun 2010 07:48

(Adds detail and comment.) By Anita Likus Of DOW JONES NEWSWIRES LONDON (Dow Jones)--U.K. house builder Bellway PLC (BWY.LN) Tuesday said it remains well positioned to continue delivering earnings growth despite a "slight reduction" in weekly sales and site visitors because of uncertainty surrounding U.K. government fiscal policy and spending reviews. The company also cautioned that possible changes to the planning system could pose new challenges to the business. But Liberum Capital analyst Charlie Campbell said that "Bellway's statement is encouraging for both the company and the rest of the sector" because the market has been very nervous about the housing sector falling since the general election May 6. "Bellway's reduction in sales is only small," he said. Bellway, which in March lifted its full-year sales target after booking a 12% increase in first-half sales, said that sales for the period from Feb. 1 to June 15 were broadly comparable with last year's, at 100 sales per week. Still, it expects legal completions for the year ending July 31 to exceed those achieved last year by around 200 homes, while it previously said it expected the figure to be between 150 to 200. In addition, Bellway said some 1,800 reservations have now been taken for 2010/11. Liberum's Campbell said that the company's volume guidance has slightly increased and sales prices on current reservations suggest scope for upgrades. Average selling price of reservations taken in the period is 10% ahead year-on-year, as a result of a change in the mix and the increasing exposure to the more vibrant market in the south of England. Cancellation rates remained stable at around 13%. Bellway, like rival house builders, is under pressure to buy land cheaply, after land values fell during the recession. That would allow it to improve margins when it starts building on that land. To date, Bellway has committed GBP151 million to buy 2,475 plots, with conditional contracts agreed on a further 5,275 plots. It has GBP55 million of net cash in the bank. The company previously said it expects double-digit margins from next year onward because from August it will start building on land it acquired at lower prices. It expects to deliver operating margins in excess of 6.5% for the full year. Bellway's shares closed Monday at 635 pence, giving the company market capitalization of GBP767 million. -By Anita Likus, Dow Jones Newswires; +44 20 7842 9407; [email protected] (END) Dow Jones Newswires June 15, 2010 02:48 ET (06:48 GMT)