Bellway said it “delivered a robust first-half performance in a challenging market”, with total housing completions rising by 2.7% to 4,702 at an average selling price of £322,180, up from £310,581. However, its underlying operating margin dipped to 10.5% from 11% at the same stage last year. The company is now guiding on an operating margin of 10.5% for the full year, and increased its guidance on volume output to between 9,300 and 9,500 homes, compared with 8,749 the prior year.
The company, which said its on course to deliver underlying operating profit in the range of £320m to £330m for 2026, also lifted guidance on average selling price to around £325,000 for the full year, up from its previous guidance of about £320,000.
Read more:
Bellway announced its interim results amid heightened concern over the economic implications of the war in the Middle East, which is widely expected to drive up inflation following the surge in oil and gas prices.
Around 1,500 residential mortgage products are believed to have been withdrawn from the market since the current conflict began, according to figures from Moneyfacts, while average mortgage rates have ticked up. The Bank of England held the base rate at 3.75% last week, and experts now believe cuts are unlikely this year, in contrast to expectations prior to the conflict.
Oli Creasey, head of property research at wealth management company Quilter Cheviot, said that although Bellway had increased its full-year guidance for sales volumes, “investors will be less pleased to see an erosion of profit margins”.
Mr Creasey explained: “This has been caused by an increase in administrative costs, which are blamed on a combination of higher employee salary costs and the costs of the company’s new timber manufacturing division. While both have the potential to deliver longer-term gains to the business, investors who are looking for signs of recovering profitability in housebuilders may be frustrated by the near-term impact.”
He added: “Management has noted that there has not been a material impact to trading from the ongoing events in the Middle East. However, it recognised that the Iran conflict has the potential to impact both cost inflation and customer demand, with volatility in the mortgage market already being experienced. The longer the conflict goes on for, the more meaningful it is likely to become for housebuilders such as Bellway.”
Jason Honeyman, chief executive of Bellway, said: “Bellway has delivered a robust first-half performance in a challenging market. While our industry continues to face several headwinds, we have seen an improvement in customer demand and reservations since the start of the new calendar year. At this stage, the situation in the Middle East has not had a material impact on trading and, supported by our forward order book, we are on track to deliver FY26 underlying operating profit within the range of £320m – £330m.
“The ongoing conflict in the Middle East heightens the risk of both inflationary cost pressures and an impact to customer demand, and we have already seen volatility return to the mortgage market. Notwithstanding this, I am confident that our self-help and drive for capital efficiency will help mitigate the impact on our strategy to increase cash generation and shareholder returns.
“Bellway has a strong balance sheet and land bank, and under stable market conditions, the group is well-positioned to continue delivering volume growth and much needed high-quality new homes in the years ahead.”
Shares in Bellway closed down 15.2% or 326p at 1,812p.
