Key points:
- Belway reported preliminary results for the year
- The company said demand has moderated
- Bellway shares are down over 1% Tuesday
UK homebuilder Bellway (LON: BWY) released its preliminary results for the year ended July 21, 2022, on Tuesday, stating that demand has moderated.
The company told investors in its release that it experienced record housing output for the period, with revenue coming in at £3.54 billion, up 13.3% from the previous year, while housing completions grew by 10.5%, ahead of the firm's target, to a record 11,198 homes. As a result, underlying profit before tax increased by 22.5% to £650.4 million.
“Bellway has delivered another strong performance. Our strengthened land bank and resilient balance sheet provide a platform for long-term growth and, importantly, during a period of economic uncertainty, they enable the group to take a more cautious approach to land investment in the year ahead,” said Bellway chief executive Jason Honeyman.
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UK housebuilders benefitted from rising house prices and tax breaks during the pandemic, and in September, Prime Minister Lizz Truss said the government is cutting stamp duty. However, homebuyers' purchasing power has been weighed down heavily by rising mortgage rates and increasing building and energy costs alongside overall inflation.
“Our long-term model is our strength and is supported by an underlying demand for new homes. Bellway's growth will continue to be disciplined as we maintain a clear focus on the high standard of our product, margin, quality of profit and value creation,” added Honeyman.
Even so, as the housing sector expects a slowdown, the company said elevated demand since the start of the pandemic has moderated, and in the nine weeks since August 1, weekly reservations were 191 per week, compared to 218 per week in 2021.
The news follows fellow homebuilder Barratt Developments, who last week said they were less confident amid higher rates as the group's forward sales slowed down, totalling 13,314 homes compared to 15,393 the previous year, reflecting the slower reservation rate.
Bellway shares have declined over 1% Tuesday, following its preliminary results.
