Bellway, the U.K.-listed house builder, has issued a warning about a decrease in home completions for the fiscal year ahead. After experiencing a fall in housing revenue in line with guidance for fiscal 2023, the company stated that it is taking measures to reduce headcount as it focuses on maintaining its balance sheet.
Revenue and Completions Update
For the year ended July 31, Bellway reported revenue of approximately £3.4 billion ($4.33 billion), compared to £3.52 billion in fiscal 2022. Housing completions also saw a decline, dropping from 11,198 to 10,945 during this period. Furthermore, the average selling price decreased from £314,400 to £310,000.
Factors Affecting Margins
Bellway highlighted that it expects the underlying operating margin for fiscal 2023 to be around 16%, down from 18.5% in fiscal 2022. This decrease primarily stems from build cost and overhead inflation, extended site durations, and a higher utilization of targeted sales incentives.
Outlook and Dividend
The company anticipates a substantial decrease in legal completions for the current financial year due to the level of the order book and prevailing low reservation rates. Despite this, Bellway plans to maintain its total dividend for fiscal 2023 at 140 pence per share, in line with the prior year’s payout.
Focus on Balance Sheet Resilience
Given the weaker business backdrop and uncertain economic outlook, Bellway will prioritize maintaining the resilience of its balance sheet and adopting a disciplined approach to production expenditure. As part of this effort, the company will assess and reduce its headcount.
Bellway reassures stakeholders that these changes will not hinder its ability to resume growth once market conditions improve. Furthermore, it notes that build cost inflation has eased slightly compared to the high single digits reported in the first half of the fiscal year.