Barratt set to meet profit forecasts as completions slip

by | Jul 13, 2023

(Sharecast News) – Barratt Developments reported a fall in net private reservations and house completions in a full-year trading update on Thursday, although it was set to meet adjusted profit expectations.
The FTSE 100 housebuilder said net private reservations per active outlet per week decreased to 0.55 for the 12 months ended 30 June, compared to 0.81 in the prior year.

It did note increased reservations in the private rental sector and to registered providers of social housing, which contributed 0.1 to the net private reservations figure.

Despite the decrease, Barratt Developments said it maintained a solid level of customer demand.

Total home completions for the 2023 financial year reached 17,206, slightly lower than 2022’s figure of 17,908.

That included 828 completions from joint ventures, marking a slight increase from the 746 joint venture completions in the prior year.

Barratt said it expected adjusted profit before tax to align with current market expectations for the full year.

The company said its balance sheet remained robust, with net cash at the year-end of around £1.07bn, down from the £1.14bn it recorded on 30 June last year.

It noted that its net cash figure was still after it completed a £200m share buyback, and land spend totalling about £820m during the year.

Looking ahead, Barratt Developments reported a solid order book for the 2024 period.

As at 30 June, its total forward sales, including joint ventures, stood at 8,995 homes, valued at £2.22bn.

That did represent a decrease from the prior year’s figure of 13,579 homes valued at £3.62bn, but the firm said it expected its order book to normalise, reflecting more typical levels for next year’s completions.

“During a year of economic and political uncertainty, we have delivered a strong operational and financial performance, while maintaining our industry-leading quality, customer service and sustainability credentials,” said chief executive officer David Thomas.

“Whilst the trading backdrop has become more challenging in recent months, with many of our customers facing significant cost of living pressures, we have responded decisively – increasing our reservations into the private rental sector, using incentives for customers in a disciplined way, and flexing our build activity, land-buying and operating costs to reflect market conditions.

“As a result, we enter the new financial year in a robust financial position with a solid forward order book and we are ready to respond to any further changes in the housing market.”

Barratt Developments said it would report its full-year results for the 12 months ended 30 June on 6 September.

Reporting by Josh White for Sharecast.com.

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