Annual revenues rise by 41% to £3.1bn but UK firm warns of growing cost of cladding issues
Last modified on Tue 10 Aug 2021 08.36 EDT
The UK housebuilder Bellway has said business is almost back at pre-pandemic levels, but warned of rising costs for fixing fire safety issues relating to cladding at some of its developments.
Revenues climbed 41% to £3.1bn in the year to the end of July – just 2.5% below 2019’s level – as demand for homes booms across the country.
The company completed 10,138 homes in its latest financial year, more than a third more than in 2020 when building and sales were dented by lockdowns, close to the pre-Covid level of 10,892 recorded in 2019.
“Bellway has delivered a strong performance with volume output once again above 10,000 homes and housing revenue approaching 2019 levels,” said Jason Honeyman, the chief executive, who took home £1.09m in the year to July 2020 despite receiving no annual bonus.
“Going forward, we are in an excellent position to continue our long-term growth strategy. The group benefits from a substantial order book and a robust balance sheet.”
Bellway’s forward orders book stands at 7,082 homes, valued at £2bn, a record and well ahead of the 6,588 last year and 4,878 in 2019.
UK housebuilders have benefitted from a surge in demand for homes fuelled by factors including the government’s stamp duty holiday, which is tapering with a full phase-out by October, low interest rates and the introduction of a government-backed mortgage guarantee scheme in March.
The company said the house price boom was offsetting pressures on the cost of building homes, where there were “manageable short-term constraints” in the supply chain and “intermittent” labour shortages owing to Covid self-isolation requirements.
The average sale price of a home was rising by 4.4% year-on-year to £306,000, Bellway said. However, it expects the average price to “moderate” to just over £290,000 over the coming year to next July.
“Further evidence from Bellway today that the housing market recovery is built on firm foundations,” said Anthony Codling, a UK housing market analyst. “Sales rates in the 2021 were ahead of 2020 and, more importantly, ahead of 2019 and forward sales are at record levels.”
The company expects the £132m it set aside to deal with cladding issues after the Grenfell Tower disaster four years ago to increase, with a further update to be provided when Bellway publishes preliminary results on 19 October.
“The board anticipates a further net legacy building safety expense in the second half of the financial year,” the company said. “Bellway continues to actively pursue recoveries from suppliers, subcontractors and professional advisors where they have fallen short of the standards required.”
In March, Bellway announced it would restart dividend payments at 35p per share, after reporting its highest ever revenues of £1.7bn for the six months to 31 January.
Last week, Bellway’s rival Taylor Wimpey reported that it had returned to profit and upgraded earnings targets after building a record number of homes in the first half.
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