4th Sep 2024 09:38
(Alliance News) - Barratt Developments PLC said on Wednesday that its profit had fallen by more than three-quarters this year as the UK housing market is hit by high mortgage rates and inflation.
The Leicestershire, England-based housebuilder said its pretax profit for the year ended June 30 had plunged 76% to GBP170.5 million from GBP705.1 million. Revenue also fell by 22% to GBP4.17 billion from GBP5.32 billion.
Total home completions this year were 14,004, a 19% decrease from 17,206 last year. Barratt expects this number to drop further to between 13,000 and 13,500 for financial 2025, but predicts average sales outlet numbers in 2026 to beat 2024 levels.
It declared a final dividend of 11.80 pence per share, falling 50% from 23.50p.
Reductions in profit reflected lower home completions, softening house prices, as well as the stabilisation of customer demand at lower levels.
Barratt said that "demand sensitivity to current mortgage pricing" and "a lack of higher loan to value mortgage availability" has led to a "challenging" housing market this year, alongside "notably higher interest rates and inflation".
Chief Executive David Thomas said: "Whilst demand continues to be sensitive to mortgage affordability, and reduced land buying activity during the past two years has had a near-term impact on the number of outlets we are operating from, we are well-positioned to meet the strong underlying demand for new homes of all tenures in the UK. We welcome the government's proposed reforms of the planning system as one of the key levers to increase housebuilding, drive economic growth and tackle the chronic undersupply of high-quality, sustainable homes."
Barratt's full year results come shortly after the completion of its GBP2.52 billion acquisition of Redrow PLC in August, a smaller housebuilding peer. Barratt is working to finalise competition clearance before it begins the integration process.
Shares in Barratt Developments fell 1.8% to 510.60 each in London on Wednesday morning.
By Emily Parsons, Alliance News reporter
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