Housebuilder Bellway has reported increases in revenue and profit but has tempered the good news with warnings over potentially significant costs on building safety.
The North East-based developer, which has sites across the UK, saw underlying operating profit increase to £332.2m from £297.7m in the half year to the end of January.
Revenue rose by 3.5% to £1.78bn, up from £1.72bn as the firm said it grew new homes built to 5,694 during the year, up from 5,656 in the same period 2021.
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Demand for new homes was strong as Bellway reported a 5.8% increase in its overall reservation rate to 202 per week, and a 3.8% increase in the private reservation rate to 162 per week. The firm's interim dividend was increased by 28.6%, to 45.0p per share.
The group said it will continue to see surging inflation, which it warned could be compounded by the Ukraine war.
It set aside another £22.1m for fire safety works on potentially dangerous cladding on its tall buildings following the Grenfell Tower tragedy, bringing its total cost so far to £186.8m since 2017. And the company warned that Government aspirations to fix fire safety issues on buildings built over the last 30 years could potential add "significant" costs to its operations.
Jason Honeyman, group chief executive, said: "Customer demand for our high quality, family homes is strong across all our operating regions, with site visitor numbers and website traffic both ahead of last year.
"The mortgage market is generally supportive and notwithstanding the recent, modest rises in interest rates and ongoing cost-of-living inflationary pressures, our mid-market product remains affordable in a historical context.
"The supply of mortgage finance is good for those customers with access to an adequate deposit and there have been some gradual improvements in the availability and pricing of higher loan-to-value mortgages, from some lenders."
Mr Honeyman said the firm had a strong order book of 7,491 homes representing a value of £2.2bn, meaning Bellway was on course to deliver volume growth of around 10% to more than 11,100 homes this year. Bellway is targeting 12,200 new homes in 2023.
The average selling price is now expected to be more than £305,000.
Bellway said it had been able to recover £2.5m of the latest increase in fire safety costs, with a total of £29.7m recouped from suppliers, subcontractors and professional advisors “where they have fallen short of the standards required”.
It added: “Materials shortages, rising fuel prices and wage costs are expected to result in continued inflationary pressures in the year ahead, with these potentially exacerbated by the worldwide consequences of the crisis in Ukraine.”
