Housebuilder Bellway: Completions Slow by a Third

Bellway, the UK's fourth-largest housebuilder by volume, shares that completions have slumped by almost a third in the year to the end of July. The coronavirus lockdown temporarily stopped operations on sites, causing the numbers.

In a trading update released recently, the firm said it completed the sale of 7,522 homes in the year. That is 31% lower than the 10,892 completed in 2019.

Fortunately, upon the re-opening of all sites and sales offices in recent weeks, sales rates and tradings have partially recovered. Sales in the month of July ran at 140 per week, 14% down from the same period last year. These results were released after Barrat, the biggest housebuilder in the UK, reported a similar completion slump of 30%.

Bellway shares that its focus for completion were homes that had already been reserved. Contracts that were expected to be completed in the next six months (even without instruction on the rate at which it is opening new sites) were also given priority. Despite the ongoing social distancing requirements, operations on-site are now approaching 80% to the normal levels.

Before the COVID lockdown measures, the firm reported to be running 5% ahead of sales terms compared to last year. It recorded 211 sales per week. Taking the lockdown into account, the number of reservations for the year dropped at 15%.

Despite all this, the firm stands financially resilient. While not going into detail as to the extent of impact the firm would have on profitability this year, the report only shares that the expected margin will be impacted by certain factors. These factors include loss of productivity, increases in overheads for closed sites and aborted costs for land deals. The latter was ultimately suspended.

On top of this, the firm will have to consider additional unspecified expenses and costs related to cladding which no longer meets the government's new standards.

Jason Honeyman, Bellway chief executive, said: "Whilst the economic outlook is uncertain, sales demand is encouraging, and the group has built a strong forward sales position. With our resilient balance sheet, we will proceed cautiously along the road to recovery, determined to return the group to its strategy of delivering long-term and sustainable growth."

Bellway will be announcing its full-year results in October.