Bellway ‘encouraged’ by year’s start despite drop in profit

Bellway has reported reduced profit and revenue in its latest interim results but bosses say they are encouraged by a positive start to this year. 

The housebuilder’s results for the half-year ended 31 January showed revenue had dropped to £1.27bn, down 30% from the £1.81bn recorded in the same period the year before. 

The drop, which was driven by a lower level of private reservations in the prior year, was accompanied by a 62% fall in pre-tax profit to £117.4m. 

Housing completions were also down 28% to 4,092, with an average selling price of £309,278. Both were in line with the board’s expectations. 

Net cash was substantially down to £76.6m from £292.5m. 

For the full year, the board anticipates a reduction in its underlying operating profit margin, “driven by a lower volume output and average selling price, together with the effects of build cost inflation and extended site durations”. 

Roughly 7,500 homes are expected to be delivered in the current financial year.  

Jason Honeyman, group chief executive, said that the results showed a “resilient performance” despite challenging trading conditions and that he had been “encouraged by the improvement in reservations since the start of the new calendar year”. 

The results statement explained: “The moderation in mortgage interest rates through the first half helped to ease affordability constraints and, together with a seasonal pick-up in customer demand, has supported an improvement in reservation rates in the early weeks of the spring selling season.” 

In the six weeks since 1 February, the private reservation rate increased by 20.7% to 163 per week. 

Bellway said its order book had increased on the back of recent trading to stand at 4,914 homes with a value of £1.3bn as of 10 March. 

“Overall, the long-term fundamentals of the UK housebuilding industry remain attractive, given the shortage of energy efficient and affordable homes across the country,” said Honeyman.  

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“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.” 

Andy Murphy, director of financials and industrials at Edison Group, said: “The sector has of course been severely impacted by a steep rise in mortgage rates, a weak macro-economic environment, and inflationary pressure on the costs of production, and Bellway has been no exception.   

“But with interest rates set to go down, house prices reaching their 2022 levels, and a future Labour Government planning a large program of housebuilding (one that focuses on the affordable homes that Bellway specialises in), 2024 looks set to be a year of recovery for the company.”