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Housebuilder Bellway's profit drop

Catherine Deshayes

Bellway has seen its net profits drop by £200 million because of the impact of the credit crunch...

In its final results for the year the house-builder has been forced to deduct write downs and costs from its profits totaling more than £130 million.

This means that the Newcastle-based company has made profits of £34.8 million compared with £234.8 million in 2007.

‘A full review of inventories has been performed and write downs have been made where cost exceeds net realisable value,' said a statement to the stock exchange this morning.

‘Estimated selling prices have been reviewed on a site by site basis and selling prices have been reduced, based on local management and the board's assessment of current market conditions.

These site reviews have resulted in write downs totaling £112.5 million.

‘In addition option costs and related fees have been written down by £15.4 million to their net realisable value.

‘The board has also reassessed the net realisable value of currently unsold part exchange properties and has written down stock by 10 per cent totaling £3 million.'

The company sold 6,556 homes for the year ending July 31 2008, 14 per cent less than the record high of 7,638 homes in 2007.

It said it is currently 23.7 per cent geared and has used 42.5 per cent of its £512 million banking facilities.

Bellway also said that, despite the market instability, it was proposing a final dividend payment of six pence resulting in a total dividend for the year of 24.1 pence compared to 43.1 pence in 2007.

Bellway's share price opened today at 523.5 pence compared with a year high of 1,122 pence and a year low of 342 pence.

Source: www.propertyweek.com