Bellway profits more than double, but supply issues hamper construction

Housebuilder Bellway has said annual profits have more than doubled, but warned that supply chain issues are holding back construction activity.

The group posted a 102.4% jump in pre-tax profits to £479 million for the year to July 31 as revenues surged 40.3% to £3.12 billion thanks to a booming property market amid the pandemic.

On an underlying basis, profits leapt 71.6% to £530.8 million.

Newcastle-based Bellway flagged the impact of ongoing supply chain disruption, which is pushing up prices of materials such as steel, timber and MDF.

It said there are some signs that soaring prices seen on certain materials in recent months are “beginning to subside”.

But the ongoing lorry driver crisis and the recent fuel issues are continuing to affect the availability of materials, while the company is also battling wider labour shortages.

Bellway said: “In general, these constraints are manageable by adopting good procurement disciplines and forward planning.

“They will, however, mean that construction output in the first half of financial year 2022 is likely to remain similar to that achieved in the first half of financial year 2021.”

The firm said house completions rose 34.8% to 10,138 over the year to July.

It cheered a “substantial” order book of £1.97 billion, up from £1.87 billion the previous year, and is targeting the sale of more than 11,100 homes in the new financial year, though it said completions will be weighted towards the second half.

It expects annual average selling prices to dip to £295,000 from £306,479 a year earlier as it focuses on more affordable properties ahead of the March 2023 end of the Government’s Help to Buy incentive scheme.

Bellway also revealed a further £51.8 million charge for fire safety work on high-rise buildings, which comes in the wake of the Grenfell Tower tragedy.

The group said this takes its total bill for fire safety work on cladding to £164.7 million since 2017.