Housebuilder says home-grown initiatives helped combat rising labour and materials costs

Bellway said rising house prices helped offset some of the impact of increased labour and materials cots as the firm posted a near 10% increase in interim profit.

The housebuilder said its pre-tax profit jumped 9.8% to £307.6m in the six months to the end of January with revenue up 3.5% to £1.78bn over the same period.

Bellway said rising costs had been tempered by house price gains, along with company initiatives such as investing in IT, appointing internal ‘cost control champions’, reviewing plot drainage designs, retaining wall systems and piling systems and using data analysis to drive down costs.

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Rising house prices helped send Bellway’s interim profit up 10%

It said: “These initiatives have helped to mitigate some of the cost and supply issues affecting the wider sector, although shortages of bricks, blocks and roof tiles continue to pose a manageable challenge.”

But it warned materials prices were here to stay for some time yet. “Materials shortages, rising fuel prices and wage costs are expected to result in continued inflationary pressures in the year ahead, with these potentially exacerbated by the worldwide consequences of the crisis in Ukraine, although we generally expect these to be offset by further revenue gains.”

Bellway’s completions stayed broadly the same, with 5,694 homes built compared to 5,656 in the first half of the previous year, which Bellway said was boosted by pent up demand. Its average selling price rose by 2.9% to £311,849, which it said was higher than initially expected due to the proportion of private completions rising from 78.4% to 82.6% year-on-year.

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The firm said it is now expecting to complete more than 11,100 homes in the full year, which would be a 9.5% increase on the 10,138 built the previous year. Its order book comprises 7,491 homes. The group is targeting 12,200 completions in 2023.

Bellway also announced it has set aside an additional £22.1m for building safety improvements, bringing its total to £186.8m since 2017. The increase was due to cost inflation and an expanded scope of works needed following investigations on blocks.

Bellway said it is ‘proactively’ engaging with the government on plans to remediate unsafe blocks above 11 metres in height, following housing secretary Michael Gove’s announcement in January of plans to force housebuilders to pay into a £4bn fund.

It added: “We are assessing the additional cost that could arise because of this potential extended review period, but this is a highly judgemental area, not least because the final details of any pledge have not been agreed, and particularly given the ongoing uncertainties with respect to the required standard of remediation and the related position of lenders and surveyors.”