“Record” level of completions delivered by Bellway
Ahead of full year results (due 15th October), Bellway have issued that completions, during the year to 31st July 2019, rose by 5.7% to 10,892, compared to the same period in 2018.
Similarly, housing revenue saw “substantial growth”, increasing to almost £3.2 billion, an increase of more than 8%, due to both volume growth and also by a rise in its average selling price to £292,000 (approx. 2.5%) because of “further changes in product and geographical mix”.
Bellway said they anticipated that pre-tax profit would match current market expectations but predicted that operating margin would see “further moderation” from the 21.5% reported at their half year results. (FY 2018 = 22.1%). The housebuilder explained, “As previously reported, whilst the pricing environment remained firm, the margin enhancing benefit of house price inflation continues to diminish.”
Bellway launched an additional 110 new sales outlets in the year, trading from an average of 268 active sites (2018 = 247). Weekly reservation rate also increased by 5% to 210 per week (2018 = 200 per week). Forward order book figures remained solid, totalling 4,878 homes (2018 = 4,841 homes), matched by a strong balance sheet and net cash of £201 million (2018 = £99.0 million).
Bellway’s CEO, Jason Honeyman, said: “Bellway has concluded another successful year, further increasing the supply of much needed new homes and delivering a record number of housing completions.
“Quality and customer care remain a priority for the business and this has helped the group achieve recognition as a five-star homebuilder for the third year in succession. Trading conditions remain stable and customer confidence is resilient. This, together with a strong forward order book and a healthy balance sheet, ensures that Bellway is well placed to continue its long-term growth strategy.”
13% increase in completions for Miller
In a recent announcement of their interim accounts for the six months to 30th June, Miller Homes reported a 13% increase in completions to 1,684 homes (H1 2018 = 1,493). This also produced a 10% increase in operating profit, reaching £77.8 million, compared to £71.0 million in the equivalent period last year and an operating margin of 20% has been maintained.
Likewise, forward sales reached record levels, totalling £368 million, an increase of 7% on last year. The housebuilder’s owned landbank also rose by 5% to 9,668 plots (Dec 2018: 9,174 plots), further supported by 3,308 controlled plots (Dec 2018: 3,350 plots), amounting to 4.1 years’ supply overall. This was further enhanced by a 7% increase (18,591 plots) in the strategic landbank (Dec 2018: 17,331 plots).
Miller confirmed they are on target to deliver their strategic target of 4,000 homes a year by 2021 and will launch a new Teesside region planned in second half of this year. The company was also awarded a 5-star rating in the HBF National New Home Customer Satisfaction Survey.
CEO, Chris Endsor, said: “Miller Homes has again achieved significant levels of growth, with volumes up 13% and operating profit 10% ahead in the first half of 2019. To have delivered an operating margin of 20% demonstrates the resilience of our regional markets and the group’s disciplined approach to land buying and cost control. Customer demand has remained strong set against a backdrop of competitive mortgage rates but just as importantly an overwhelming need for many of our customers to acquire a new home.
“As a further sign of our confidence in our regional markets, we invested significantly in land in the period, acquiring 12 sites at a cost of £94 million. Our new Teesside region will be launched in the second half of this year, becoming fully operational from the start of 2020.
“The other key focus areas for the business remain customer satisfaction and employee engagement and in relation to both, we continue to perform strongly. Our customer satisfaction score continues to exceed 90% and a recent employee survey has confirmed that 94% are positively engaged in the business.
“Our regional proposition, supported by significant land investment, excellent build quality and customer service delivered by a highly engaged workforce mean that we are on track to achieve 4,000 homes by 2021.”
Slight dip in profits at Persimmon
In the six months to the end of June, Persimmon have announced that profit is slightly down year on year, as they continue to focus on customer quality and service.
Pre-tax profit in the period amounted to £509.3 million, compared to £516.3 million in 2018, with total group revenue dropping by 4.5%, to £1.754 billion against £1.836 billion last year.
New homes sold totalled 7,584 in the six months (2018 = 8,072), at an average selling price of £216,942 (2018 = £215,813). This was made up of 5,963 private sales (2018: 6,577) at an ASP of £242,912 (2018: £238,773).
Dave Jenkinson, Persimmon group CEO said: “Improving the quality and service delivered to our customers remains our top priority and I am encouraged with the progress made in the first half, which clearly shows that Persimmon is changing. Our customer satisfaction ratings for the current HBF survey year are showing improvement and I am particularly pleased that, in July, Persimmon became the first housebuilder to introduce a retention scheme for customers placing us at the forefront of strengthened consumer rights for home buyers. The improvements to our customer service approach had two main impacts in the period.
“First, customer service spend increased by around 40% year on year and these additional initiatives are anticipated to increase our annual customer care costs by an estimated £15 million. Second, and as noted earlier in the year, our decision to invest an additional c.£140 million in work in progress as we held back some sites for later sales release to give customers more accurate moving-in dates reduced the group’s overall sales volumes.
“Allowing for these impacts, Persimmon’s trading in the first half of 2019 was strong. I am confident that the progress we are making with our initiatives, our strong forward build, healthy forward sales and robust balance sheet place Persimmon in a strong position for the second half.”