Bellway hopeful despite revenue and profits dip
HOUSEBUILDER Bellway will build fewer homes this year than last, following results which show falling revenue and profitability.
The Newcastle-based developer has already seen a 28% drop-off in completions in the six months to the end of January, compared with a near record high last year.
And earnings have followed suit with revenue falling 29.6% to £1.27bn and operating profit more than halving to £139.9m.
But despite the downbeat numbers, bosses said they had been encouraged by more recent trading.
They pointed to easing inflation and mortgage costs as the driver behind a 15.4% increase in the private reservation rate to 105 per week, up from 91 in the same period last year. And in the six weeks since the beginning of February that rate has increased to 163 per week.
Bellway has also seen a boost to its order book since the end of the half year, with 4,914 homes on order at a value of £1.3bn, compared with 5,842 homes at a similar point in 2023. Notwithstanding signs of recovery, the firm said it would see a fall in operating margin this year driven by lower volume output and average selling price, as well as build cost inflation and extended site durations. It expects to deliver around 7,500 homes this year compared with 10,945 last year. Bosses say a return to growth is now expected in 2025.
Elsewhere the firm said it was cooperating with regulators from the Competition and Markets Authority, who have launched an investigation into eight housebuilders – Bellway among them – amid concerns about sharing of “commercially sensitive” information which could be reducing competition by influencing building rates and prices.
Jason Honeyman, group chief executive, said: “Bellway has delivered another resilient performance in a period of challenging trading conditions. Although the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates throughout the first half has helped to ease affordability constraints and we have been encouraged by the improvement in reservations since the start of the new calendar year.
“The group remains on track to deliver volume output of around 7,500 homes (31 July 2023 - 10,945 homes) in the full financial year and, if market conditions remain stable, we are well-placed to build the order book through the second half which will serve as a platform for a return to growth in financial year 2025.
“Overall, the long-term fundamentals of the UK housebuilding industry remain attractive, given the shortage of energy efficient and affordable homes across the country.
“We remain confident that the group’s robust balance sheet and operational strength, combined with the depth and quality of our land bank, will enable Bellway to successfully navigate changing market conditions and capitalise on future growth opportunities.”
We’ve been encouraged by the improvement in reservations, Jason Honeyman