Bellway has implemented a new round of value engineering to try to design more cost out of its build process.
In the year to 31st July 2022 Bellway’s total revenue rose by 13% to a new high of £3,537m (2021: £3,122m – 2020: £2,225m). Housing completions grew by 10%, and ahead of target, to a record 11,198 homes (2021: 10,138 – 2020: 7,522).
Underlying operating margin improved to 18.5% (up from 17% the previous year and 14.5% in FY2020). This was driven by improved site operating efficiency, management of cost pressures and completions from more recently acquired land, the board said.
Underlying pre-tax profit was therefore up 22% to £650.4m (2021 £530.8m) but that was before Grenfell-related legacy building safety costs. This time Bellway set aside £346.2m to fix legacy issues (compared to £51.8m the previous year). The total amount set aside since 2017 is £513.7m
As a result, pre-tax profit was down 36% to £304.2m (2021: £479.0m).
Chief executive Jason Honeyman said: “To help offset some of the cost pressures in the wider market, we have continued to implement a range of value engineering initiatives, including ongoing reviews of plot drainage designs, retaining wall systems and piling systems. Each of our divisions also has a nominated internal cost control champion whose remit is to promote and reinforce our strong commercial culture, while maintaining the high quality of our homes.”
Looking ahead, he said: “In the current financial year and supported by our recent investment in land and work-in-progress, the group retains the operational capacity to grow output up to 12,200 homes, an ambition set out at our preliminary announcement in October 2021.
“Output is, however, expected to be more moderate, given the uncertain economic backdrop. We have a strong order book, and our build programmes are weighted to a higher proportion of social completions and given this, the Board currently expects volume output to be similar to the prior year. The final outturn will be dependent on the autumn and spring selling seasons and the group will prioritise the high standard of our product, margin, quality of profit and value creation.
“The long-term fundamentals of our industry remain strong and there is a shortage of high quality, energy efficient and affordable homes across the country. If market conditions remain robust, Bellway has ambitions and significant capacity to deliver further sustainable volume growth, over several years, to in excess of 16,000 units. This can be delivered from a platform of our strong land investment, substantial cash position, potential expansion into new regions and the ongoing maturity of divisions.”
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