Bellway trading update: cash generation and completions rise as demand softens

Bellway has closed its 2026 financial year with more house completions, higher revenue and a substantial improvement in cash generation. That is a solid outcome in a housing market still wrestling with affordability constraints and higher mortgage rates.

The headline figures are encouraging. Total housing completions rose by 10.8% to 9,695 homes, exceeding Bellway's previous guidance of 9,300 to 9,500. Adjusted operating cash flow also came in above guidance at more than £850 million.

However, the update is not free from cracks. Reservation rates weakened, incentives increased, operating margin declined and the forward order book ended the year considerably smaller. Investors therefore have a fairly balanced announcement to consider.

The full details are available in the original company announcement.

Bellway's key FY26 figures

Metric	FY26	FY25	Change or context
Total housing completions	9,695	8,749	Up 10.8%
Overall average selling price	Around £324,000	£316,412	Higher due to geography and sales mix
Housing revenue	£3.14 billion	£2.77 billion	Up by more than 13%
Underlying operating profit	Around £320 million	£303.5 million	Increase expected
Adjusted operating margin	Around 10%	10.9%	Lower due to more bulk sales
Adjusted operating cash flow	More than £850 million	£638.9 million	Above previous guidance
Year-end net cash	£157.7 million	£41.8 million	Significant improvement
Forward order book	4,206 homes	5,307 homes	Lower year on year
Order book value	£1.20 billion	£1.52 billion	Lower year on year

Completions exceeded guidance

Bellway entered FY26 with a strong forward order book, which helped it deliver 9,695 homes despite subdued trading for much of the year. This was ahead of the company's previously guided range, primarily because of strong conversion from its bulk sales pipeline.

Bulk sales typically involve selling multiple homes to a single buyer, such as an institutional landlord or housing provider. They can support volumes and cash generation, but often carry lower margins than conventional private sales.

That trade-off is visible here. Housing revenue increased by more than 13% to £3.14 billion and underlying operating profit is expected to reach around £320 million. Underlying operating profit excludes net legacy building safety expenses and other exceptional items.

Yet the adjusted operating margin is expected to fall from 10.9% to around 10%. Bellway attributes this to the greater proportion of lower-margin bulk sales.

The average selling price rose to around £324,000, but management said this reflected geographic and mix changes rather than underlying house price inflation. Incentives offered to customers averaged around 5% of selling prices, up from 4.1% last year, highlighting the support still required to secure sales.

For more background on the company, readers can visit the Bellway PLC share page or revisit our earlier Bellway half-year trading update coverage.

Demand weakened as mortgage rates rose

Customer demand improved during the early spring selling season before moderating from April in response to rising mortgage rates.

The private reservation rate fell by 5.8% to an average of 131 homes per week. On a per-outlet basis, the private reservation rate including bulk sales slipped to 0.55 homes per week from 0.57. Excluding bulk sales, it declined to 0.49 from 0.52.

The overall reservation rate, including social homes, was 3.5% lower at 165 per week. One encouraging detail was the cancellation rate, which remained low and improved slightly to 12% from 13%.

Bellway opened 59 new sales outlets and traded from an average of 238 during the year, compared with 246 previously. It finished July with 253 outlets, up from 249, giving it a broader closing platform if market demand improves.

The more immediate concern is the forward order book. Strong completion volumes combined with lower reservation rates reduced it to 4,206 homes, worth £1.20 billion. That compares with 5,307 homes valued at £1.52 billion a year earlier.

A forward order book represents reserved homes that have not yet legally completed. A smaller book means Bellway begins FY27 with less revenue already secured, increasing the importance of fresh reservations.

Cash generation is the standout feature

Bellway's progress on cash is arguably the strongest part of the update.

Adjusted operating cash flow exceeded £850 million, compared with £638.9 million last year and previous guidance of £750 million to £800 million. Management said higher output and improved asset turn drove the result. Asset turn refers to how efficiently a company uses its asset base to generate revenue.

The group ended the year with net cash of £157.7 million, up from £41.8 million. Adjusted gearing, which includes net cash or debt and amounts owed to land vendors relative to equity, remained below 5%, compared with 8.3% last year.

This was achieved after £496 million of land expenditure, £84 million of dividend payments and the near-completion of a £150 million share buyback.

Bellway expects that buyback to finish during August. It then plans to launch a further £50 million programme as the initial tranche of anticipated FY27 shareholder returns.

The wording matters. The £50 million is not necessarily the full amount shareholders will receive during FY27. Bellway will announce the total level of returns with its full-year results in October after reviewing market conditions and its capital allocation priorities.

The board continues to expect underlying dividend cover of around 2.5 times for FY26. Dividend cover measures how many times underlying earnings per share cover the dividend per share.

Land spending remains selective

Bellway contracted to purchase 8,578 owned and controlled plots across 35 sites, compared with 8,120 plots across 51 sites last year. The total contract value fell to £505 million from £567 million.

This included a site of around 1,900 plots in the Dunfermline Strategic Development Area, intended to support growth across Bellway's two Scottish divisions.

The strategic land bank contains around 48,000 plots, with more than half holding a positive planning status. Bellway wants strategically sourced land to provide more than 20% of volume output over the medium term.

The selective approach should help protect the balance sheet while retaining capacity for future growth. The risk is that planning delays or prolonged weak demand could slow the conversion of this land into completed sales.

What investors should watch next

Bellway's operational execution looks strong. Completions and cash flow both exceeded guidance, net cash increased and another buyback is planned. These are meaningful positives, particularly against a difficult market backdrop.

The weaker reservation rates and reduced order book provide the counterweight. There was also no underlying house price inflation, customer incentives increased and lower-margin bulk sales diluted profitability.

Management has warned that softer demand could persist and that build-cost inflation may return. Bellway is responding through cost control, disciplined land investment and a focus on converting its existing land and work in progress into cash.

The next major date is 13 October 2026, when Bellway is scheduled to publish its full-year results and provide guidance for FY27. The main points to watch will be completion expectations, margin guidance, the pace of reservations and the final scale of shareholder returns.