Bellway shares were little changed on Wednesday despite the housebuilder reporting falling revenue, completions and average sales price in the first half of 2023.
It has been a terrible 2023 for UK housebuilders. Bellway’s trading statement for the year ended 31st July confirms the mid-cap housebuilder is facing the same pressures reported by its FTSE 100 peers.
Bellway generated housing revenue of around £3.4bn, down from £3.5bn in 2022. Total housing completions fell to 10,945 homes, weaker than 2022’s 11,198. Their Average selling price dipped to £310,000.
The housebuilder’s margins were squeezed to 16% from 18.5% by rising prices and the use of sales incentives.
Although Bellway’s results do not make for pleasant reading, the tepid 1.3% reduction in the Bellway share price suggests the bad news is baked into the cake. Indeed, while Bellways results were poor, they weren’t catastrophically bad.
“Reservation rates are down sharply, the order book is also down sharply, prices are no longer going up and completions are expected to go down in the coming year, but shares in Bellway are holding firm despite the gloomy outlook statement that accompanies the housebuilder’s latest trading update,” said AJ Bell investment director Russ Mould.
“Analysts are cutting their profit forecasts for the fiscal year to June 2024 and still the shares do not seem to care, so perhaps markets are already pricing in a lot of the bad news.
“After all, Bellway’s shares have almost halved from their pre-pandemic peaks of early 2020 and the difficulties discussed by chief executive Jason Honeyman have not just developed. Inflation, in the form of wage and raw material costs, began to move higher in spring 2021. The Bank of England started to raise interest rates in December 2021. Trussonomics blew up the mortgage, pension and government bond markets in autumn 2022.”