Investing.com -- Bellway Plc (LON:BWY) raised its full-year revenue expectations after reporting a 7.7% increase in forward orders and steady reservation rates during the spring selling season, the company said on Tuesday in a trading update, sending shares up by 6%.
The U.K. housebuilder said it now expects to complete between 8,600 and 8,700 homes in the financial year ending July 31.
The projection is unchanged from previous guidance and reflects continued demand in recent months.
The forward order book stood at 5,759 homes as of June 1, with a total expected sales value of £1.65 billion, up from £1.45 billion a year earlier.
"In our view, sales rates remain in normal market territory and Bellway is on track to
deliver 20% volume growth in the two years ending 31 July 2026. Site numbers are expected to be stable at around an average of 245 for FY2025," said analysts at RBC Capital Markets in a note.
The private reservation rate per outlet per week, excluding bulk sales, remained flat at 0.61, matching the level reported in the same period last year. Including bulk sales, the rate rose 8.1%, supported by an increase in group reservations to 161 per week from 152 in the prior year. Bulk sales contributed 0.06 reservations per outlet per week, compared with 0.01 a year ago.
The overall average selling price for the full year is now expected to be approximately £315,000, higher than the prior estimate of £310,000.
Bellway said the increase reflects changes in product mix, including a higher proportion of private completions in the final quarter of the year.
Completions rose by 2.1% to 196 per week from 192 in the same period a year earlier, and the cancellation rate remained consistent with prior levels.
The group operated from an average of 242 sales outlets during the reporting period and plans to maintain an average of about 245 for the full year.
Bellway said it has contracted to buy 6,759 plots of land since Aug. 1, 2024, with a total contract value of £495 million.
"We sense that if the company could open more sites it could sell more homes. Planning rules have changed, but planning departments appear either under-resourced or unwilling to push more planning applications through the system," RBC added.
This compares with 4,458 plots acquired between Aug. 1, 2023, and June 2, 2024. The company also entered into option agreements for 17 additional sites, up from 15 in the same period last year.
Net debt stood at £73 million at the time of reporting. Bellway said it expects to close the financial year with low adjusted gearing, compared with 6.8% on July 31, 2024.
The company reaffirmed its expectation for an underlying operating margin approaching 11%.
The interim dividend of 41 pence per share, announced in March, is scheduled to be paid on July 1. Bellway said its dividend cover target remains around 2.5 times underlying earnings.
Bellway is fully sold for the current financial year and said that, if market conditions remain stable, it expects to deliver cumulative volume growth of 20% over the two years to July 31, 2026.