Bloomberg News

Bellway May Pay Largest Dividend Since U.K. Property Slump

March 27, 2012

Bellway Plc (BWY) may pay its biggest second-half dividend since 2007 after the U.K. homebuilder’s net income climbed 64 percent in the first half, Finance Director Keith Adey said in an interview.

Bellway, based in Newcastle, England, aims for a payout of 12 pence a share for the six months through July, up from 8.8 pence a year earlier, Adey said. The company announced a first- half dividend of 6 pence today.

“You’d hope to double that at the final,” Adey said today by telephone. “We’ll retain roughly two-thirds of the earnings within the business and pay a third out to shareholders.”

Homebuilders are widening profit margins by focusing more on houses and developing land bought after prices dropped during the global financial crisis. The U.K. government is trying to spur construction after homebuilding in England and Wales fell in 2010 to the lowest during peacetime since 1924.

Bellway fell 20.5 pence, or 2.4 percent, to 839 pence in London, the most since Feb. 21. The shares gained 6.1 percent yesterday. Bellway has climbed 18 percent this year, while the Bloomberg EMEA Home Builders Index has advanced 32 percent.

Unlike most publicly traded U.K. homebuilders, Bellway paid a dividend during the residential real-estate slump. In 2007, the company said it would pay 26.7 pence a share in the six months through July 2007.

‘Safe Return’

“What we’re trying to do is balance our strategy of volume growth with having a safe and ongoing annual return to shareholders,” said Adey, who replaced Alistair Leitch as finance director in January.

Net income rose 30.4 million pounds ($49 million) in the six months through January from 18.5 million pounds a year earlier, Bellway said today. Operating margin gained 320 basis points to 10.1 percent as a result of building on cheaper land acquired during the recession. One basis point is the equivalent of 0.01 percentage point.

“There remains an underlying demand for our homes,” Chairman Howard Dawe said in the statement. “The group therefore intends to continue its three pronged strategy of delivering volume, selling price and operating margin growth.”

Revenue increased 12 percent to 459 million pounds as the average selling price rose 8.5 percent to 182,753 pounds. Bellway said it will pay the 6 pence dividend on July 2.

The company completed 2,455 homes compared with 2,332 a year earlier, according to the statement.

To contact the reporter on this story: Chris Spillane in London at cspillane3@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.


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