Bellway's Profit Boosted by Lower UK Mortgage Rates
By Aby Jose Koilparambil
(Reuters) -UK homebuilder Bellway reported a 12% rise in half-year profit on Tuesday as lower mortgage rates and improved consumer confidence drove sales.
Its shares rose 3.5% in early trade as the company also raised its dividend payment.
Home sales in the UK got a boost in the first quarter as homebuyers tried to complete purchases before a property tax exemption expires from April 1 and by more UK rate cuts, although the pace of rate cuts is slow.
"We have been encouraged by the improvement in customer enquiries and reservations since the start of the new calendar year," CEO Jason Honeyman said in a statement.
Bellway, which reiterated its target of building 8,500 homes in the year ending July 31, said the weekly booking rate for private homes per outlet climbed 13% to 0.76 homes in the seven weeks since February 1.
Investec analyst Aynsley Lammin said in a note that Bellway's pre-tax profit was "modestly better" than what the brokerage expected, with reservations also at healthy levels.
Bellway reported an underlying pre-tax profit to 150.2 million pounds ($194.1 million) for the six months ended January 31, up 12% from a year earlier.
CEO Honeyman said that demand was supported by "good availability" of mortgage finance, but affordability "remains relatively constrained for those customers requiring higher loan-to-value mortgages".
The Bank of England has cut interest rates three times from a 14-year high last August and earlier this month held borrowing costs at 4.5%.
Bellway's bigger rival Persimmon month said this month that it will construct more houses this year and target improved margins, while Taylor Wimpey in February forecast an improvement in demand this year.
Bellway also declared an interim dividend of 21 pence per share, above the 16-pence payment it handed out a year ago.
(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Janane Venkatraman and Susan Fenton)
