Bellway profit down 85% to £35m

Bellway has suffered an 85% drop in its pre-tax profit – but with the previous year’s figure being a staggering £250m the house builder has still been left with a profit figure of £35m this time round despite the latest turmoil in the housing market.

Bellway’s latest financial results, announced this morning, cover the 12 months to 31 July 2008.

The latest profit figure was battered badly as a result of a £130m hit in the form of an exceptional item triggered by the need to slash the value of land stocks.

Chairman Howard Dawe said: “The current state of the housing and mortgage markets has been well documented. The speed of the deterioration is unprecedented.”

Bellway’s latest crop of data shows:

• 6,600 homes sold -  a fall of 14% from the previous year.
• £170,000 average price - down 2%.
• Housing turnover cut by 16% to £1.1bn.

The group’s turnover was £1.4bn in the previous year.

Bellway had an interest charge of £19m, up a whisker from £18m previously which was a reflection of the changes in interest rates.

Gearing (i.e. the ratio of debts to assets) was 24%, a statistic that many of the other leading house builders would die for in today’s torrid economic climate.

Bellway utilises only 43% of its £510m bank facilities. 

The value of the group’s stock of unsold part exchange properties has been written down by 10%.

Last year Bellway’s operations were pouring off money so profusely that the group was able to hand £51m back to its shareholders in the form of dividends.

Even now, the belt-tightening has not blown away the plan to give shareholders a further £7m pay-out in the form of additional dividend.

Social housing completions were up by 49% to 1,300 homes.

Dawe said: “In response to the reduction in workloads, we have seen a curtailment in labour rate increases and in sub-contract tender prices, where recent tenders have fallen by up to 6%, particularly in areas such as foundations and road and sewer works.”

Last year 30% of production used timber frame systems - the price of timber has fallen by up to 10%.

National agreements with major suppliers should reduce ongoing costs by a further £5m a year.

The major internal management changes have been:

• A 35% cut in the workforce, announced in May
• A slimming down in the number of divisions from 18 to 13

Bellway anticipates making £8m a year of costs savings as a result of the above changes.