Bellway order book rises 20.5% to £1.9bn

Newcastle-based house building giant Bellway said on Tuesday its order book has risen 20.5% to £1.8 billion as it published a trading update for the period from February 1 to June 6, 2021.

In its outlook, Bellway said: “As previously reported, the reduced level of work-in-progress at 31 January, compared to July 2020, will result in a lower level of completions in the second half of this financial year, compared to the first half.

“The board therefore still expects that Bellway will complete the sale of around 10,000 homes (31 July 2020 – 7,522 homes, 31 July 2019 – 10,892 homes) in the current financial year.

“Notwithstanding the growth in completions already achieved to date, the value of the forward order book has risen by 20.5% to £1,889 million (31 May 2020 – £1,568 million, 2 June 2019 – £1,643 million) and comprises 6,763 homes (31 May 2020 – 6,038 homes, 2 June 2019 – 6,312 homes), with 60% of these contracted.

“This strong order book, together with further investment in land, work-in-progress and sales outlets, provides an excellent platform from which Bellway can continue its disciplined growth strategy and generate further value for shareholders.”

AJ Bell Investment director Russ Mould said: “Bellway is making hay while the sun shines. Amid strong demand for homes, the housebuilder is setting itself up for the future with its record investment in land acquisitions.

“While land prices may not be quite as depressed as they were in the initial stages of the pandemic, it is still an opportune time to buy and this should have positive implications for the profitability of homes built on these plots and for future growth.

“The stamp duty holiday has clearly been a driver for demand but there are other factors at play as people look to get more space, largely for home working, in the wake of the pandemic.

“This in turn means people are buying more of Bellway’s larger, higher quality homes, which is driving up average selling prices.

“The main negative is the rising raw material costs and difficulties in securing skilled labour.

“At the moment these headwinds are having only a limited impact as house prices surge ahead.

“However, Bellway and its peer group may face a more difficult situation if the housing market cools.”