Construction groups upbeat as revenues climb higher

Morgan Sindall and Bellway have expressed confidence over the outlook for the housebuilding and construction sectors after hailing double-digit sales increases.

Morgan Sindall and Bellway both reported strong sales growth. Picture: Michael Gillen
Morgan Sindall and Bellway both reported strong sales growth. Picture: Michael Gillen

Morgan Sindall, owner of Glasgow-based “partnership” housing developer Lovell and urban regeneration specialist Muse Developments, said it was on track for a “strong” second-half performance as it announced a 14 per cent jump in revenues to £1.3 billion for the six months to 30 June.

Meanwhile, Bellway told investors that it is set to report housing revenues of £2.5bn, an increase of more than 13 per cent on last time, when it delivers annual results in October.

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In a trading update covering the year to 31 July, Bellway said that the residential property market remained “robust”. Demand since June’s snap general election has remained strong, the Newcastle-based housebuilder said, adding that customer demand for new homes has so far been “unaffected by any uncertainty in the wider economy”.

Bellway completed the sale of 9,644 new homes, a rise of 10.6 per cent year-on-year, while its average selling price grew 2.9 per cent to a record figure of £260,000.

Chief executive Ted Ayres said: “A focus on delivering growth, set against a backdrop of favourable market conditions, has helped Bellway to surpass last year’s record in respect of both volume and operating margin and further increase the group’s contribution to the supply of much-needed new homes.

“This excellent trading performance, together with additional investment in attractive land opportunities, ensures that Bellway is well placed to continue its disciplined growth strategy.”

Meanwhile, Morgan Sindall said it was hiking its interim dividend by 23 per cent to 16p a share, to be paid on 30 October, as it reported an adjusted pre-tax profit of £23.7m for the first half – a jump of 47 per cent compared with last year.

The group has been buoyed by a string of public sector contractor deals with Aberdeenshire and Edinburgh councils and the Hub South West Scotland framework. These are expected to be used as a procurement route for a series of schools, offices and other community facilities.

Chief executive John Morgan said: “With further margin improvement in construction and infrastructure and an increase in scheme completions in partnership housing and urban regeneration, we are confident of another strong performance by the group in the second half.”