Bellway (LON:BWY) reported what management described as a “good” first-half performance, delivering higher homebuilding volumes and maintaining its full-year profit outlook despite a softer selling period through much of 2025 and ongoing uncertainty tied to the conflict in the Middle East.
In prepared remarks, the company said trading conditions “markedly improved” since the start of the calendar year, with increased homebuyer interest and reservations. Executives cautioned, however, that the Middle East conflict could weigh on demand and raise inflation risk, particularly through build costs, though the group said it had not seen a material impact on sales rates so far.
First-half results: higher volumes, stable pricing, modest margin pressure
The average selling price (ASP) rose 3.7% to just over £322,000, which the company said was driven by geographic and product mix changes, while “headline pricing” remained broadly stable.
Gross margin slipped 20 basis points to 16.2%. Management attributed the change to higher incentive usage, the absence of house price inflation (HPI), and low single-digit build cost inflation, partially offset by higher-margin land in the mix. Underlying operating margin declined 50 basis points to 10.5%, reflecting both the gross margin movement and higher administrative costs from investment across the business.
Underlying profit before tax was “slightly higher” at £151 million. The company increased its interim dividend by almost 10% to 23 pence per share.
Adjusting items included £300,000 in administrative expenses related to the previously announced Competition and Markets Authority (CMA) investigation, alongside building safety-related adjustments discussed during the call.
Capital allocation: focus on cash generation and efficiency
Bellway emphasized an ongoing push to improve capital efficiency, particularly by reducing work-in-progress (WIP) and increasing cash conversion. The land balance stood at £2.5 billion, down around £38 million since year-end, reflecting a “largely land replacement only” strategy.
During the first half, the company entered new land contracts on deferred terms totaling around £130 million and settled land creditor payments of around £180 million, ending with land creditors of £290 million, or 12% of land value. Management said it expects land creditors to rise over the medium term to 15% to 20% of land value, “similar to historic norms.”
WIP decreased by £39 million to £2.3 billion. Within that, the value of part exchange properties increased by just over £20 million, with part exchange accounting for 6% of completions, while site WIP fell by £61 million to just over £2.1 billion. Adjusted gearing, including land creditors, remained low at 10.3%, and net asset value per share increased to just over £30.
On cash flow, Bellway moved from a small net cash position to net debt of £72 million at the half-year, which management said aligned with plans to run a more efficient balance sheet. The company reported operating cash generated before land investment, building safety spending, and shareholder distributions of £314 million, equating to a 2x conversion of operating profit to adjusted operating cash flow. Management reiterated its aim to keep that conversion at a minimum of 2x over the three years to FY2028.
For the year, Bellway targeted adjusted operating cash flow of £750 million to £800 million, saying volume growth and tighter WIP controls should drive operating cash flow higher by £100 million to £150 million year-over-year, compared with operating profit growth of £20 million to £30 million.
The company also provided an update on shareholder returns, noting that dividend payments and share buybacks totaled £105 million in the first half. It said it had completed around £64 million of the £150 million share buyback launched in October and reiterated an intention to return excess capital in future years, while maintaining underlying dividend cover of 2.5x.
Building safety: provision stable, spend expected to rise
Bellway said progress on legacy building safety remediation continued, with the overall provision “broadly stable.” At January 31, 2026, the provision was £507 million. Management said it has completed determinations on all legacy buildings in England and Wales under the Joint Plan, covering 457 buildings in scope.
The company said work has started or been completed on 172 buildings, with most spending expected by FY2030. Bellway has spent £212 million since the start of the program, including £21 million in the first half of FY2026.
For FY2026, Bellway continued to budget for total building safety spend of over £150 million, while cautioning that this depends on receiving payment requests from the government for work carried out on its behalf for the Building Safety Fund totaling around £90 million. It also said it has recognized £81 million of recoveries to date and continues to pursue further supply chain recoveries, though no additional reimbursements have been recognized because they were not “virtually certain” at the balance sheet date.
In response to a question, management said it was using a 3% inflation assumption for building safety remediation work.
Trading update: sales rates improving, regional split persists
In the first half, the private sales rate was 0.47, with January the strongest month at 0.6, and management said momentum had continued into the spring selling season. Over the first six weeks from February 1, Bellway said it achieved a private sales rate of 0.66, with bulk sales contributing an additional 57 homes.
Management highlighted pronounced regional differences, with Scotland, the North of England, and the Midlands outperforming the South. It said the Midlands and north delivered sales rates of around 0.75, compared with around 0.5 in the South.
Headline pricing was described as firm, but incentives were “full at 5%.” Executives said house prices were more robust than flats. Management said the two weeks of trading coinciding with the Middle East conflict delivered a consistent private sales rate of 0.65, equivalent to 155 private homes per week, and added that it had not seen an immediate impact on cancellation rates or sales.
The company reported being over 85% sold for FY2026 and said it held an order book of over £1.5 billion, or 5,300 homes, as of March 13.
Land, outlets, and operational initiatives
Bellway said its land bank remained largely unchanged at 94,000 plots, split evenly between owned/controlled and strategic land. The company said it contracted on 4,700 plots across 15 sites in the period, including a 1,900-home site in Scotland converted from its strategic land pipeline.
Management said it had 80 strategic land planning applications, or around 17,000 plots, in the system this financial year—an increase it described as threefold in two years—and that these plots should support margin recovery and outlet numbers from FY2028 onward. The company said it had detailed planning consent on over 95% of plots needed to meet FY2027 volume, providing “good visibility” on outlet openings. Bellway said it remained on track to open 55 outlets this year and 55 to 60 next year, with average outlet numbers expected to hold around 240 in FY2026 and FY2027, rising to 250 in FY2028.
On costs, Bellway said build cost inflation remained modest at around 1% to 2% and it was not seeing labor or materials availability issues. However, it warned of heightened inflation risk from the Middle East conflict. Management said most supplier agreements were fixed from the start of 2026 for around 12 months, though it was seeing requests for increased delivery charges and fuel surcharges, and it was monitoring energy-intensive materials such as bricks and concrete products.
Bellway also outlined cost-efficiency and product initiatives, including:
- Brand strategy: plans to phase out the Ashberry brand, citing cost and customer confusion, and move to a single Bellway brand with three specification tiers, including “Bellway Premium.”
- Product design: a new house type range, the “Bellway Collection,” designed to be timber frame friendly to improve efficiency and reduce waste.
- Timber frame investment: the opening of its timber frame facility, “Bellway Home Space,” in January, with seven divisions currently supplied by the factory.
The company also reported it had been rated a five-star housebuilder for the tenth consecutive year and said it achieved an overall score of 4.38 under the HBF’s newer customer scoring system, which management said was the highest among national listed housebuilders.
For FY2026, Bellway guided to volume of 9,300 to 9,500 homes, ASP of around £325,000 (driven by mix), administrative overhead of £170 million to £175 million, operating margin around 10.5%, finance expense around £20 million, adjusted operating cash flow of £750 million to £800 million, and land spend of £500 million to £600 million. Management also reiterated it was targeting FY2026 operating profit in the region of £300 million to £330 million, with an updated underlying operating profit range discussed on the call of £320 million to £330 million, supported by the half-year performance and order book.
About Bellway (LON:BWY)
Bellway p.l.c., together with its subsidiaries, engages in the home building business in the United Kingdom. The company builds and sells homes ranging from one-bedroom apartments to six-bedroom family homes, as well as provides homes to housing associations for social housing. It offers homes under Bellway, Ashberry, and Bellway London brands. The company was founded in 1946 and is headquartered in Newcastle upon Tyne, the United Kingdom.
