Bellway fell to its first full-year loss as a quoted company after it wrote down the value of its land bank by £66m.

The housebuilder fell from a pre-tax profit of £34.8m to a loss of £36.6m for the year to July 31.

However, the results were widely praised by analysts as the company reduced its net debt, putting it in a strong position to rebuild its land bank. The company, which bolstered its finances in August with a £45m equity raising, lowered its net debt by £180.9m to £36.8m.

Turnover fell 41 per cent from £1.15bn to £684m, while losses per share were 23.9p, against earnings of 23.5p.

Housebuilding in the UK is expected to contract by 18.1 per cent during 2009, the biggest fall since records began in 1948.

Yet, through cutting costs – including axing 1,500 jobs, about 50 per cent of its workforce – and reducing debt, Bellway is in a rare position in being able to buy land.

John Watson, chief executive, said: “We have effectively been in hibernation for the past year and, although we are not going to be gung-ho, it could be time to start dipping our toe back in the land market.”

Since August, Bellway has started £32m of work across eight sites, mainly in the south of England. The company has secured £349.4m of new work for this year, with 62 per cent of that already contracted, but noted that the downside risk of a double-dip recession could lead to a flurry of cancellations.

During previous recessions, property prices have hit a low point 18 months after unemployment – currently at 7.9 per cent, its highest since 1995 – has peaked.

“We are looking at it a week at a time at the moment and know that there could be worse to come,” Mr Watson said.

Bellway said it was seeing a slight recovery in south-east England, where a short-term squeeze on supply helped lift sales.

The group also announced that John Cuthburt, Northumbrian Water’s managing director, would be joining the board.

Bellway’s shares fell 11½p to 794p.

FT Comment

John Watson has come off looking prudent in his conservative approach to land buying. With solid gearing – net debt is 2 per cent of net asset value, compared with a sector average of 27 per cent – Bellway, unlike many of its rivals, can look beyond patching up its balance sheet and begin the process of rebuilding. But, as it tentatively draws back the curtains after hibernation, management looks to be under no illusion that there could be some cold fronts to come.

As the only UK housebuilder currently paying a dividend – the final pay-out is held at 6p, cutting the total from 24.1p to 9p – Bellway’s shares are a good buy compared with its peers. But, as housebuilders follow the equity rally higher and underlying fundamentals remain the same, the shares look overpriced.

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