Barratt Development’s shareholders should hope the boost in housebuilding promised by the Labour government will kick in soon.
Shares in the housebuilder were down around 2% on Wednesday after the group reported an 18% drop in completions and 21% drop in revenue for the full year period ended 30 June. Adjusted profit before tax was down by 56%.
“Barratt Developments has struggled to build momentum and full-year numbers were a painful read for investors. The group completed around 14,000 new homes last year, which was towards the top end of group guidance,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“But that still marks a big drop off from the 17,206 seen in the prior year as mortgage and affordability pressures are still weighing on potential buyers. Momentum did improve slightly as the year progressed, but further easing of mortgage rates will be necessary for activity to pick up significantly. With fewer homes being sold and at lower prices, less cash has come through the front door. Alongside elevated levels of incentives, used to convince buyers to sign on the dotted line, underlying pre-tax profits have taken a big hit and more than halved year-on-year.”
The acquisition of Redrow featured heavily in Barratt Development’s full-year results and investors will hope the combination can help turn the tide for the enlarged group.
The deal is in the hands of the CMA and both parties await competition clearance before the combination can finalised. Due to regulatory constraints, guidance for FY25 couldn’t include Redrow’s numbers, so Barratt provided guidance for themselves only.
The forecast of only 13,000 to 13,500 completed homes in FY25, lower than FY24’s 14,000, will certainly raise some eyebrows.