Bellway set to build more homes than expected this year but warns of ‘volatility’ in market due to Iran war

Bellway has said it is on track to build more homes than it previously expected this year.

The housebuilding giant, in its half-year results, said it built 4,702 homes in the six months to 31 January, up from 4,577 last year.

It said it now expects to deliver between 9,300 and 9,500 units in the full year. This is more than the 9,200 it outlined in previous guidance and the 8,749 built the previous year.

The group’s half-year turnover rose by 6.3% to £1.5bn but Its pre-tax profit dipped from £140.8m to £139.9m. Its underlying pre-tax profit, which excludes building safety and other exceptional costs, rose slightly from £150.2m to £150.9m.

Jason Honeyman, chief executive of Bellway said the Iran war has “not yet had a material impact” on the group’s trading.

He said: “The ongoing conflict in the Middle East heightens the risk of both inflationary cost pressures and an impact to customer demand, and we have already seen volatility return to the mortgage market. Notwithstanding this, I am confident that our self-help and drive for capital efficiency will help mitigate the impact on our strategy to increase cash generation and shareholder returns.”

Honeyman said there are good levels of product availability and material cost inflation on new tenders is “modest”.

However he added: “Looking ahead, and given the ongoing conflict in the Middle East, there are heightened risks of supply chain disruption and rising cost inflation. In light of this, our experienced procurement teams continue to work closely with our wide range of supply chain partners, to ensure we are well-prepared for our targeted increase in volume output in the current financial year and to minimise the impact of any potential disruption to the supply chain.”

Bellway increased its overall private output by 2.4% to 3,702 homes and its social housing output 4.2% to 1,000 homes, with a similar number of social homes expected in the second half.

The group said it is on track to deliver underlying operating profit of between £320m - £330m in the year. It recognised a net adjusting expense of £10.7m in the half year in relation to legacy building safety.

Bellway’s overall average selling price is expected to be around £325,000, up from £316,412 mainly due to changes in product mix.