- Bellway offers no outlook for current year
- Doubts over the future of Wework
- IWG shares gain in London
Shares in housebuilder Bellway (BWY) fell 2% in early trading before stabilising down 0.6% at £22.02 after the firm said it wouldn’t give any financial guidance on the current year until it released its preliminary results in October.
Meanwhile, shares in office rental firm IWG (IWG) leapt 10% to 166.5p on news that US rival Wework (WE:NYSE) had ‘substantial doubts’ it could continue as a going concern.
ORDER BOOK AND RESERVATIONS SHARPLY LOWER
Developer Bellway posted a 3% decline in revenue for the year to the end of July to £3.4 billion as it completed slightly fewer homes at 10,945 and its average selling price eased to £310,000.
However, private sector demand was weak with reservations down nearly 36% to 109 per week compared with 170 per week a year ago, and the firm only hit its completions and sales target thanks to a ramp-up in social housing construction.
Build cost inflation and sales incentives reduced the operating margin to around 16% against 18.5% last year, while the order book for the current year is just 4,411 homes, down nearly 40%, with a value of around £1.12 billion compared with £2.1 billion a year ago.
Chief executive Jason Honeyman described the firm’s performance as ‘resilient’, given the tough new-build housing market, but warned that given the level of the order book and low reservation rates, completions would ‘decrease materially’.
The firm said in light of the current uncertain backdrop, it was ‘focused on maintaining strong cost control disciplines and balance sheet resilience’ and wouldn’t provide an updated market outlook until it published its preliminary full-year results in mid-October.
WEWORK WARNS ON ITS FUTURE
On the other hand, investors seemed happy to chase up shares in serviced office provider IWG after its New York-listed peer Wework cast doubt on its ability to continue as a going concern.
Shares in the once-hyped office space-sharing firm collapsed by almost a quarter in after-hours trading following its admission there was ‘substantial doubt’ over its future due to continued losses and projected cash needs ‘combined with increased member churn and current liquidity levels’.
If Wework, which is backed by Japanese tech firm Softbank (9984:TYO), cannot cut costs or raise the necessary finance to continue, it could create a major opportunity for IWG to grab market share.
