Barratt expects higher profits as home completions increase
Barratt expects profits to be at the “top end” of market expectations, it announced this morning, amid a boom in home completions.
The housebuilder delivered 17,243 homes in the year ended 30 June 2021 – 5,000 more than the year before, according to the company’s trading update.
Despite the pandemic Barratt built more homes than it did in the previous year when it developed 12,604 properties.
However its figures for the year ended in June 2019, when Barratt built 17,856 homes, show that the major housebuilder has not yet managed to return to pre-pandemic levels of housebuilding.
The results follow the news that only one of the biggest housebuilders in Britain, Vistry Group, saw an increase in its revenue and built more homes during 2020 than in the previous one, according to research by Warwick Estates.
Richard Hunter, head of markets at interactive investor, said: “Barratts has echoed the positive noises coming from the housing sector with a robust period of trading.”
Hunter cautioned that despite the upbeat outlook “the fallout from the withdrawal of government aid schemes is yet to be felt in terms of UK unemployment and consumer confidence, while another strong inflation reading will also remind investors that interest rate rises remain on the horizon, although not an imminent threat.”
Nonetheless, the previously announced return to a dividend payment was a welcome development, “although the current yield of 1.1 per cent is anaemic by historical standards,” said Hunter. But, he continued: “the projected yield of around 4 per cent should be sufficient in restoring what has been an attractive factor of the housebuilders over recent years, namely a punchy dividend income in addition to capital return.”
Chief executive David Thomas said: “It is thanks to the hard work, resilience and flexibility of our employees and sub-contractors that we made such excellent progress this year, whilst maintaining our high standards of quality and service.”
He continued: “We have seen continued strong demand for our high quality, energy efficient homes on well-designed developments, enabling us to deliver 17,243 home completions this year. Whilst these are still uncertain times, we enter the new financial year in a strong position and remain focussed on our medium term targets, including delivering 20,000 homes a year.”