Bellway (BWY) H2 2024 earnings summary

Executive summary

• FY24 marked a reset year with 7,654 completions, a 30.1% decline, and revenue of £2,356.7m, down 30.6%, reflecting weaker trading and accelerated social housing delivery in FY23.

• Maintained a strong balance sheet with net assets of £3,465.4m, low gearing, and a robust finance team, supporting future investment and growth.

• Healthy forward order book and high-quality land bank position the business for multi-year growth, with at least 8,500 completions targeted for FY25.

• Ongoing focus on organic growth, outlet expansion, cost control, margin improvement, and sustainability initiatives, including increased timber frame use.

• Leadership transition underway with a new CFO joining.

Financial highlights

• Underlying operating profit was £238.1m with a 10% margin; gross margin fell to 16% due to incentives, higher overheads, and build cost inflation.

• Housing revenue declined to £2.4bn, with private and social completions down due to weaker trading and a lower starting order book.

• Underlying earnings per share dropped to 135.2p; underlying finance charge was £9.7m, expected to rise to £16m next year.

• Year-end net cash was £232.0m, with average net debt at £46m and adjusted gearing under 7%.

• Proposed total dividend is 54.0p per share, with a cover of around 2.5x underlying earnings.

Outlook and guidance

• FY25 guidance: at least 8,500 completions, including around 1,900 social homes, and an average selling price of £310,000.

• Operating margin projected to approach 11% for FY25, with gross margin guidance at 16.5%+ and administrative expenses rising up to 10%.

• Multi-year growth ambition: over 20% volume growth across FY25 and FY26, with capacity to approach 10,000 completions by FY26.

• Dividend cover to remain around 2.5x underlying earnings.