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Bellway cuts output by a third

17 Oct 23 After making nearly half a billion pounds in profits last year, house-builder Bellway is anticipating a substantial slow-down in the year ahead.

In the year to 31st July 2023, Bellway built 10,945 homes, close to its 2022 record of 11,198. This year, it is looking at 7,500 completions, a 31% decrease.

Total revenue for the 2023 financial year was £3,407m  (2022: £3,537m), a reduction of 3.7%.

Pre-tax profit was up 59% to £483.0m (2022: £304.2m) but this increase was only because of the greater cost of post-Grenfell legacy building safety expenses in the previous year. In fiscal 2022  Bellway had a £346.2m exceptional charge for building safety repairs; this time it was £49.6m.

Of this, £30.5m has been set aside to fix structural defects on a reinforced concrete frame found on a high-rise block of flats in Greenwich that it built 12 years ago. Bellway is carrying out a review of other buildings where the same designers were used but, so far, no other similar design issues with reinforced concrete frames have been identified.

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Underlying profit before taxation was down 18% £532.6m (2022: £650.4), which was in line with our expectations, given build cost inflation.

The board remains confident that Bellway can ride the downturn.

Chief executive Jason Honeyman said: “Bellway has delivered a resilient performance against a backdrop of rising mortgage interest rates and challenging market conditions. Looking ahead, our operational strength and experienced teams will enable the group to successfully navigate a changing market, and we will maintain a clear focus on delivering high-quality homes to our customers and making further progress against the priorities set out in our ‘Better with Bellway’ sustainability strategy. The depth of our land bank and robust balance sheet provide ongoing strategic flexibility and scope for outlet growth in the year ahead. Notwithstanding the near-term market challenges, Bellway remains very well-placed to capitalise on future growth opportunities and to continue creating long-term value for all our stakeholders.”

Chair John Tutte said: “The long-term housing market fundamentals remain positive and there is a shortage of high-quality, energy efficient and affordable homes across many parts of the country. Bellway has a strong operational structure, now with 20 trading divisions, which provide the capacity to organically grow volume in the longer-term to over 13,000 homes per annum. The group has the ability to scale up this structure when market conditions allow, and this will ensure that Bellway continues to play an important role in increasing housing supply in the years ahead.”

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