Housebuilder warns of possible portfolio revaluations in January, blaming discounting at other firms
Bellway has taken a swipe at some of its rivals by claiming that heavy discounting could lead to further writedowns in its own portfolio.
In a trading update for the period between 1 August and 30 November, the UK housebuilder said: “Pricing pressures, driven in the main by certain competitors' activities and lenders' lower valuations, could lead to continued margin erosion and if these pressures persist a further review of the book value of land and work in progress at 31 January 2009, at the time of the interim results, cannot be ruled out.”
It did not name the rivals but it is understood that Taylor Wimpey and Barratt are the two heaviest discounters because of their high level of debt.
Bellway described trading over the period as “extremely testing” as a result of poor consumer confidence and the restricted availability of mortgages.
The net sales rate was between 50 and 60 per week, which the company said was in line with expectations but less than half last year's level. The order book at the end of November was £340m, compared with £677m in 2007.
It added: “The proportion of sales to housing associations is likely to increase beyond last year's 20% and we currently await the outcome of negotiations with the Homes and Communities Agency in relation to the potential purchase of stock units.”
The housebuilder said it is on target to reduce its debt by £100m by the end of July next year.