Homebuilder Bellway has announced stable interim results on the back of a “moderate yet sustained” improvement in reservations since the start of the year.
The group’s half-year results for the six months to 31 January showed a 0.6 per cent dip in pre-tax profit to £305.9m, with revenue rising 1.6 per cent to a record £1.8bn.
It said demand from homebuyers had started to improve after heightened mortgage rates in the wake of the autumn mini-Budget and the end of Help-to-Buy contributed to a 43.8 per cent decrease in the private reservation rate.
Overall, reservations dropped by almost a third on last year, with weaker private demand partially offset by the group’s decision to accelerate the construction of social homes.
There was a modest increase in private reservations in January, it said, with further improvements week-on-week supported by a seasonal pick-up and some easing of mortgage rates.
Despite tough trading conditions, the group announced a return of surplus capital of £100m to shareholders through a share buyback programme to start this week, crediting its strong cashflow and resilient balance sheet.
Group chief executive Jason Honeyman said it was a strong performance in the face of challenging operating and trading conditions.
“We have been encouraged by the moderate, yet sustained, improvement in reservations since the start of January 2023, and the group remains on track to deliver volume output of around 11,000 homes in the full financial year,” he said.
Proactive expansion of Bellway’s land bank had provided vital strategic flexibility, while the share buyback was evidence of the company’s disciplined approach to capital allocation, he added.
“The group has a robust balance sheet with strong cash resources and, combined with our strategic land holdings, Bellway has an excellent foundation to deliver long-term returns for shareholders,” Honeyman said.
Earlier this month, Persimmon revealed a 24 per cent drop in annual pre-tax profit, reflecting the impact of a £275m building-safety provision.
Taylor Wimpey posted a 22 per cent increase in pre-tax profit but warned completions would tumble as higher mortgage rates hit demand.