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TOP NEWS: Barratt Developments lowers outlook for home completions

10th Jul 2024 08:43

(Alliance News) - Barratt Developments PLC on Wednesday said it expects adjusted pretax profit in the financial year just ended to be "slightly" ahead of previous guidance, but cut expectations for home sales in the year ahead.

Chief Executive David Thomas said it was a "strong operational performance", in a "another year of economic and political uncertainty".

Shares in the housebuilder were down 3.0% to 476.34 pence in London early Wednesday. The wider FTSE 100 was up 0.3%.

Leicestershire, England-based Barratt Developments said total home completions are at the upper end of guidance range for financial 2024 at 14,004, down 19% from 17,206 a year prior.

Adjusted pretax profit for the financial year to June 30 is anticipated to be slightly ahead of previous expectations.

But Barratt expects home completions to fall again in the coming financial year in a range of 13,000 to 13,500. In February, Barratt forecast completions of between 13,500 to 14,000 for financial 2025.

Nonetheless, the CEO was in optimistic mood.

"We have significant net cash, a well-capitalised balance sheet and a solid forward sales position all of which allow us to enter [financial 2025] with confidence," Thomas said.

Net private reservations per active outlet per week in the financial year that ended June 30 rose to 0.58 from 0.55 a year ago.

Total forward sales at June 30 of 7,239 homes were down from 8,995 a year ago at a value of GBP1.91 billion, in line with expectations, but down from GBP2.22 billion a year before.

First time buying activity has stabilised, the firm said, with demand amongst existing homeowners resilient.

Build cost inflation of around 5% in financial 2024 was in line with previous guidance.

In February, Barratt agreed an all-share takeover offer for Redrow PLC, its smaller Ewloe, England-based peer, valuing Redrow at GBP2.52 billion.

In June, The UK Competition & Markets Authority said it will investigate the planned takeover to assess competition concerns.

Thomas said the proposed combination would create an "exceptional UK housebuilder ensuring we are well-positioned for the future".

Redrow shares were down a similar 3.0% early Wednesday, to 674.49p, giving a GBP2.22 billion market capitalisation.

Barratt's Thomas welcomed the new UK government's "urgency and focus" on housebuilding and reform of the planning system as "key to both unlocking economic growth and tackling the chronic undersupply of new homes".

"We look forward to working with government and wider stakeholders to address supply side constraints and deliver the new homes, of all tenures, the country needs," he added.

Barratt also noted previously disclosed legacy charges of around GBP192 million would be treated as adjusted items in results for the year to June 30.

By Jeremy Cutler, Alliance News reporter

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