6th Sep 2023 09:39
(Alliance News) - Homebuilder Barratt Developments PLC on Wednesday reported bottom-line progress in its recently concluded financial year, despite lower completions.
It also cut its dividend and said that there would be "no further share buybacks at this stage".
In the year to June 30, pretax profit rose 9.8% to GBP705.1 million from GBP642.3 million a year before, as revenue edged up just 1.0% to GBP5.32 billion from GBP5.27 billion.
However, on an adjusted basis, pretax profit fell 16% to GBP884.3 million from GBP1.05 billion, as adjusted operating margin deteriorated to 16.2% from 20.0%.
Barratt explained that reduced profitability reflects a "fall in customer demand, overall house price inflation running below build cost inflation and the operational gearing impact as the market has slowed down."
Further, it noted that statutory pretax profit improved despite adjusted profits deteriorating. This is because costs associated with legacy properties fell to GBP181.9 million from GBP437.5 million.
Completions fell 3.9% to 17,206 from 17,908, which the firm said reflected the market slowdown experienced from September 2022.
Barratt proposed a final dividend of 23.5 pence per share, bringing the annual total to 33.7p, behind the previous year's payout of 36.9p. "Given current market uncertainty, the board has decided to retain surplus capital to maintain the resilience of the group's balance sheet," it explained.
Further, the company said there would be "no further share buybacks at this stage".
"Whilst there remains a clear need for increased housebuilding in the UK, short-term demand has been impacted by mortgage affordability challenges," Barratt noted.
Looking ahead, Barratt reiterated guidance for total home completions between 13,250 and 14,250 in financial 2024. It also said that it expects the difficult backdrop to continue over the coming months.
"We have delivered a strong operational performance in a challenging operating environment. Customers continue to face cost of living and mortgage affordability challenges, and new developments are increasingly constrained by an ineffective planning system. Today's results reflect the hard work and dedication of our teams and the decisive actions we have taken as a business to respond to market conditions," said Chief Executive David Thomas.
Shares in Barratt were down 2.0% to 434.60 pence each in London on Wednesday morning.
By Sophie Rose, Alliance News reporter
Comments and questions to [email protected]
Copyright 2023 Alliance News Ltd. All Rights Reserved.
Related Shares:
Barratt Developments