Shares in Bellway fell this afternoon as the housebuilder revealed that sales were down in July despite the easing of lockdown restrictions
Private customer reservations were 140 per week last month, down from 162 a week in July 2019.
The developer’s share price fell 4.17 per cent as it said it completed the sale of 7,522 new homes in the year ended 31 July, compared to 10,892 last year.
6,013 of the new homes were completed before the coronavirus lockdown was implemented in the UK.
“This is a significant reduction due to the considerable effect that COVID-19 has had on business operations,” Bellway said.
Reduced productivity and enhanced health and safety requirements have led to a lower than anticipated gross margin across Bellway sites. The reduction will eat into Bellway’s profit in the year ended 31 July and subsequent financial years, it said.
Goodbody building analyst David O’Brien said this morning’s update was “softer than expected”.
“Completions since lockdown are behind expectations and peers’ performance and while build rates are improving slowly, Bellway is the lower end of build rates for peers,” he said.
“The slow ramp up to full production levels will have an impact on gross margins over the next few years.”
However, Bellway chief executive Jason Honeyman said sales demand was “encouraging”.
Honeyman said: “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.”