Bellway recladding costs overshadow hit from Covid

Aaron Morby 1 month ago
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House builder Bellway this morning revealed it has set aside £47m to cover post-Grenfell recladding and other fire remediation works on its buildings.

Bellway hopes to restore margins this year
Bellway hopes to restore margins this year

The figure overshadows the direct impact costs of the Covid pandemic, estimated at nearly £26m, from non-productive site costs during lockdown and impacts from several aborted land deals.

Even taking into account further added costs of £19m arising from extended site durations and extra social distancing measures, the impact was less than the expected cost of retrofitting properties to meet more stringent Government safety requirements.

This morning, the house builder reported pre-tax profit in the year to July had slumped by almost two-thirds to £237m.

The number of housing completions fell by 31% to 7,522 from last year’s total of 10,892.

After a difficult second half, Bellway said it was seeing strong forward sales for the year ahead and forecast completions to rebound to around 9,000 by summer 2021.

Productivity is back to 85%-95% of pre-Covid levels, with the firm hoping for further improvements from future material price negotiations and talks with subcontractors.

Chief executive Jason Honeyman said: ” In the first nine weeks of the new financial year, trading has been robust, with overall average weekly reservations rising by 30.6% to 239 per week (1 August to 29 September 2019 – 183 per week).

“Pent-up demand arising from the prolonged period of lockdown inactivity, together with Government support through the stamp duty holiday and provision of Help-to-Buy, have contributed to this reassuringly strong performance.”

As a result of this positive start, the order book at the start of October was up 42% to £1,87bn, comprising 6,624 homes (2019 – 5,190 homes).

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