Bellway profit craters but shares jump on strong look-ahead

Despite a significant drop in completions and profit, housebuilder Bellway has said it is well-positioned to deliver growth going forward and supports the Government’s plan to unlock housing construction.

Shares surged by more than eight per cent in early trades.

Bellway told markets this morning that profit fell by 44.6 per cent in the year ended 31 July, from £687.3m to £381.1m. 

Revenue, too, dropped by 30.1 per cent to £2.3bn, from £3.4bn in 2023. 

The housebuilder completed 7,654 homes during the financial year, down 30 per cent from 10,945 in 2023 and at an overall average selling price of £307,909, down from £310,306 in 2023. 

Its operating margin fell from 16 per cent to 10 per cent, while its earnings per share fell from 328p to 135.2p. 

Chief executive Jason Honeyman described the company’s results as “resilient” despite “challenging operating conditions”. 

He attributed the fewer completions to a lower order book, but said that customer demand picked up as mortgage rates moderated in light of the Bank of England’s decision to cut the base interest rate, which eased cost pressures. 

Bellway’s forward order book as of 29 September comprised 5,109 homes, from 4,636 homes on 1 October 2023, and had a value of £1.4bn, from £1.2bn in October 2023.

“The combination of these improving trading conditions and our strong outlet opening programme has generated a healthy increase in the year end order book.  As a result, we are well-placed to deliver a material increase in volume output in financial year 2025,” Honeyman said.  

‘Mixed messages’ hurting growth

Despite welcoming the Government’s plans to reform the planning system, boss Jason Honeyman warned a lack of certainty on government policy was hurting growth.

“There is hesitancy in the market at the moment. We have many customers who have got concerns about the October Budget . . . so they are delaying decisions,” said Jason Honeyman, chief executive of the FTSE 250 developer, told the FT.

Honeyman said there were “mixed messages”, with the housing and growth agenda “damped a bit by talking down the market”.

Brits on both sides of the market have been increasingly nervous about potential changes in the budget, with a general tone of gloom in Labour’s speeches taking over from optimism ahead of the election.

Honeyman added that Bellway was well-placed to deliver growth “if market conditions remain stable”.

“Our operational strength and robust balance sheet, combined with the depth and quality of our land bank, provide an excellent platform for Bellway to deliver strong multi-year growth and to continue creating long-term value for all our stakeholders,” he said.

Anthony Codling, RBC capital managing director, said: “Bellway’s full year results were in line with expectations, but its outlook for the year ahead exceeded them.

“Bellway is ready to stand up to the plate to help Labour deliver 1.5 million homes over the next five years and keen to grow its housebuilding business. 

“The guidance for the year ahead is higher than current consensus forecasts, and we therefore expect the shares to perform well today.”