Bellway commercial managers in cost cutting drive

Grant Prior 1 year ago
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Commercial managers at Bellway are being ordered by their bosses to keep a tight lid on build costs in the year ahead.

The call comes after the Enquirer revealed that subcontractors are being asked to cut their rates by 5% on Bellway jobs.

A trading update from the house builder this morning highlighted the impact of Covid-19 as completed sales fell 31% to 7,522 for the year to July 31 2020.

Net cash in the business dropped to £1m from £201m but Bellway said it has a substantial order book of £1.76bn comprising 6,588 homes of which 64% are contracted.

The update said: “This resilient forward sales position provides some operational certainty and visibility with regards to cash generation in the months ahead.”

Cost control will now be a major focus.

The update stated: “Management will continue to focus their efforts on ensuring that commercial teams throughout the Group follow strong cost control disciplines in the year ahead.

“Incremental costs, arising from extended site durations due to reduced productivity and enhanced health and safety requirements, will result in a lower anticipated gross margin across our sites.

“There will therefore be a corresponding reduction in profit, both in the year ended 31 July 2020 and, in subsequent financial years.

“The Group has also incurred additional expense, in relation to non-productive site-based costs borne during the period of ‘lockdown’, which would have ordinarily been capitalised into work-in-progress.”

Jason Honeyman, Chief Executive, said: “Our priority throughout this crisis has been the health, safety and wellbeing of our colleagues, customers and subcontract workers.

“The collective response from those who work for and with Bellway, both on and off-site, has been tremendous and this has enabled us to respond positively and responsibly during these challenging times.

“Our attention now turns to the trading year ahead.  Whilst the economic outlook is uncertain, sales demand is encouraging, and the Group has built a strong forward sales position.

“With our resilient balance sheet, we will proceed cautiously along the road to recovery, determined to return the Group to its strategy of delivering long-term and sustainable growth.”

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