Bellway Delivers 2024 Results with Lower Completions, Eyes Stronger Growth in 2025

Key Points:

1. Bellway’s housing completions dropped to 7,654 in 2024, contributing to a 30.1% fall in revenue.
2. The forward order book increased by 18.4% in value, indicating improved customer demand for 2025.
3. Bellway is targeting 8,500 home completions in 2025, driven by better market conditions and a healthy forward order book.

Bellway plc (LSE:BWY), one of the UK’s largest housebuilders, has released its preliminary financial results for the year ended 31 July 2024, highlighting a challenging year due to market conditions, but signaling a more positive outlook for 2025. The Group experienced a drop in housing completions and revenue, but recent trading conditions and forward order numbers indicate recovery in the near future.

2024 Financial Performance
Bellway completed 7,654 homes during the 2024 financial year, down from 10,945 in 2023. This decline in completions was reflected in the company’s revenue, which fell by 30.1% to £2,380.2 million, compared to £3,406.6 million in the previous year. This decrease was primarily due to a lower starting forward order book and challenging trading conditions, especially in the first half of the year. However, the average selling price remained relatively stable at £307,909, just below the previous year's £310,306.

Despite these challenges, customer confidence improved as mortgage interest rates and inflation pressures moderated, leading to a gradual recovery in sales. By the second half of the year, the private reservation rate per outlet per week increased to 0.58, up from 0.43 in the first half of the year, reflecting better trading conditions and a seasonal uplift during the spring months.

Margins and Profitability
Bellway’s underlying operating margin came in at 10.0%, in line with prior guidance but down from 16.0% in 2023. The margin reduction was attributed to lower volumes, rising costs, and the use of targeted sales incentives. Additionally, the slower sales market since mid-2022 increased site-based overheads, further impacting profitability.

Underlying profit before tax was £226.1 million, significantly lower than the £532.6 million recorded in 2023, but in line with Bellway’s expectations. Adjusting items, including legacy building safety expenses of £37.0 million and costs associated with aborted transactions amounting to £5.4 million, reduced the reported profit before tax to £183.7 million, compared to £483.0 million in 2023.

Bellway’s return on capital employed (RoCE) also saw a decline to 6.9%, down from 15.8% in 2023, due to the drop in asset turnover and lower operating margins. However, the Group is confident that its strong platform will allow it to increase volume output in the coming years, which will support improvements in RoCE from the current financial year onwards.

Encouraging Trading and Positive Outlook for 2025
Despite the challenges faced in 2024, Bellway has seen recent improvements in trading conditions and customer demand. By 31 July 2024, the company had a forward order book of 5,144 homes, up from 4,411 homes in the previous year, representing a 18.4% increase in value to £1,412.9 million. The forward order book remains strong as of 29 September 2024, with 5,109 homes and a value of £1,427.9 million.

Customer demand remained robust into the new financial year, with the private reservation rate increasing by 48.5% in the nine weeks from 1 August to 1 October 2024, compared to the same period in 2023. This jump is partly attributed to bulk investor sales, which contributed to 232 home reservations during this period. Bellway’s ability to maintain firm pricing across regions, along with improving market conditions, has allowed the company to forecast an average selling price of around £310,000 for 2025, slightly higher than 2024’s figure.

Looking ahead, Bellway aims to complete at least 8,500 homes in 2025, a significant increase from 2024. The Group’s strong forward order book and growing outlet numbers provide a solid foundation for this growth. Bellway is also targeting a healthy forward order book at the end of the current financial year, to support further volume increases in 2026.