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UPDATE 2-H'builder Bellway sees H1 profit rise on higher prices
December 7, 2010 / 7:43 AM / 7 years ago

UPDATE 2-H'builder Bellway sees H1 profit rise on higher prices

* Says profit will rise up to 20 pct in H1

* Prices to continue to rise in H2

* Changing product mix drives prices higher - CEO

* Decline in consumer confidence has levelled out - CEO

* Shares rise 7.2 percent (Adds CEO, analyst comments, details, updates shares)

By Adveith Nair

BANGALORE, Dec 7 (Reuters) - British homebuilder Bellway (BWY.L) expects first-half profit to rise up to 20 percent as it sells houses in more expensive parts of the country, and said average prices would continue to rise in the second half.

Bellway shares were up 7.2 percent at 598 pence at 1042 GMT on Tuesday on the London Stock Exchange.

“We are doing fewer apartments, more houses,” Chief Executive John Watson told Reuters. “We are selling more houses in the southern part of the country than in the north. That in itself brings higher average selling prices.”

Bellway has 3,614 sales secured for this fiscal year, up nearly 4 percent, and 400 for the next financial year.

Average selling prices for these sales were up over 8 percent to 167,600 pounds ($263,400) and Watson said Bellway would try to push this up to 170,000 pounds for the year ending July 2011.

“What we are saying is while volumes may be flat, average selling prices at the half and the year will be improving,” Watson said.

The bright outlook, which puts first-half profit for the current year at up to 22.8 million pounds, comes just two months after Bellway abandoned its target to raise sales volumes by 10 percent in 2011 following subdued activity in autumn. [ID:nLDE69E06R]

Bellway had reported a pretax profit of 19 million pounds for the first half ended January.

“We thought that there would be a lot of pain hitting the economy (following the government spending review) and we were worried,” Watson said. “But it’s not been that bad. We are still managing to sell houses.”

Bellway, the UK’s fifth largest housebuilder by market value, said full-year results would depend on the level of consumer confidence during the 2011 spring selling season, which in turn hinged on a supply of affordable mortgages.

The dearth of mortgages, which came about as the credit crisis forced a majority of players to withdraw from the market leaving just six lenders, and declining consumer confidence ahead of painful government spending cuts had crippled demand for homes in Britain.

While Bellway’s forecast contrasts with mortgage lender Nationwide, which said house prices fell for the fourth month in five in November, it echoes rival Berkeley Group Holdings’ (BKGH.L) positive outlook. [ID:nSGE6B10A6] ($1=.6362 Pound) (Reporting by Adveith Nair in Bangalore and Lorraine Turner in London; Editing by Anne Pallivathuckal)

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