October 18, 2016 / 6:25 AM / 9 months ago

British builder Bellway expects supplier price squeeze

2 Min Read

A crane is seen at a Bellway housing development in London, Britain October 12, 2015.Suzanne Plunkett/Files

LONDON (Reuters) - British housebuilder Bellway expects some of its suppliers to seek price rises after the Brexit-induced fall in the pound, echoing consumer goods group Unilever's move to recoup currency losses through higher prices.

Bellway, which on Tuesday posted a better than expected 41 percent jump in full-year profit to 498 million pounds ($620 million, said that suppliers of imported timber have already suggested they might raise prices following sterling's decline since Britain's vote to leave the European Union.

"I'm sure we're going to have what we would call some sort of Unilever moments with some of our suppliers," Chief Executive Ted Ayres told Reuters.

"The only people who have mooted price increases are structural timber (companies) and that's obviously because of the exchange rate and they're mooting price increases of probably up to 10 percent."

Ayres added that U.S. dollar-denominated timber represents only a small part of Bellway's costs.

Britain's biggest retailer, Tesco settled a pricing row with Unilever last week after halting online sales of goods produced by the Anglo-Dutch giant in a dispute caused by the pound's plunge since the Brexit vote.

About 70 percent of Bellway's materials are sourced from within Britain, with around 20 percent from Europe, Ayres said.

He also said that demand for new homes has remained strong since the June referendum, echoing a number of recent surveys suggesting that demand has picked up in recent weeks.

"Post-Brexit, in those early weeks there was a bit of insecurity in the market place, but since then it has regained momentum."

Reporting by Costas Pitas; Editing by David Goodman

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