But housebuilder ‘encouraged’ by rebound in demand early this year
Bellway has reported a 30% drop in turnover for the first half of the year.
The housebuilder, for the six months to 31 January 2024 recorded revenue of £1.25bn, down on the £1.8bn recorded in the same period the year prior.
Total completions and average selling prices were also down, from 5,695 to 4,092 and from £316,929 to £309,300, respectively.
Bellway had previously said it is expecting to cut build volume by a third and see a near halving of profit in its current financial year, given weak demand for new homes prompted by high interest rates. It said in October it is expecting completions to drop to around 7,500 in the current year, from 10,945 in the year just gone, and for its profit margin to drop by six percentage points.
Today’s update said headline pricing has remained firm, with ongoing use of targeted sales incentives to attract customers and secure reservations. Build cost inflation has moderated during the period.
The private reservation rate increased by 15.4% to 105 per week, compared with 91 in the 2023 period, representing a private reservation rate per outlet per week of 0.43.
Bellway said the reduction in mortgage interest rates had led to “encouraging levels of customer enquiries in the traditionally quieter winter trading period” and an improvement in the private reservation rate in January to 0.59 per outlet per week.
The firm has built on the recovery in demand by opening 34 new outlets and has plans to open 40 more in the second half of the year.
The forward order book at 31 January comprised 3,970 homes with a value of £1,012.5 million, which will support full year volume output of around 7,500 homes.
“Bellway has delivered another resilient performance in a period of challenging trading conditions,” said Jason Honeyman, group chief executive.
“While the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates through the first half has eased affordability constraints and we are encouraged by the seasonal pickup in customer leads and an improvement in reservations since the start of the new calendar year.
“We have maintained balance sheet resilience and, supported by the strength of our land bank, Bellway remains well-placed to capitalise on future growth opportunities and will continue to play an important role in increasing housing supply in the years ahead.”
The group currently has net cash of £77m, down from £292.5m.
The group is set to make an interim results announcement on Tuesday 26 March.