25th Mar 2020 13:59
(Alliance News) - Barratt Developments PLC on Wednesday became the latest housebuilder to cancel its dividend amid the Covid-19 crisis.
Barratt declared a 9.8 pence per share payout in February for the half to December, but this has now been cancelled, saving the FTSE 100 firm around GBP100 million.
Earlier on Wednesday, peer Persimmon PLC cancelled a proposed 125p interim dividend, as well as a 110p final dividend. Fellow UK housebuilders Countryside Properties PLC, Redrow PLC, Bellway PLC, Taylor Wimpey PLC, and Crest Nicholson Holdings PLC have all also suspended payouts so far this week.
Barratt said with building sites now shutting down there will be a "significant" impact on both construction output and reservations. It has suspended all land buying, all recruitment, and has postponed all non-essential spending.
The company said it has a "very strong" balance sheet. It had cash of GBP380 million as of March 20, and has an undrawn GBP700 million revolving credit facility. and drawn private placement notes of GBP200 million.
Barratt started 2020 well, it said, with good customer demand for homes, with completions higher in the year-to-date than the year prior and forward sales "strong". However, as Covid-19 has spread in the UK, reservations have reduced and cancellations increased.
"Given the ongoing uncertainty, we are unable to quantify the impact of Covid-19 on our financial and trading performance at this stage. Accordingly, the group is suspending all existing financial guidance," Barratt said.
"The business is facing this challenge from a position of strength, with a robust balance sheet, a highly skilled workforce and an experienced board. Our customers and employees will remain at the heart of every decision we make. The board is focused on taking the right actions so that we will emerge from this pandemic well-placed to continue to deliver the high-quality housing the country needs."
Shares were 1.0% higher on Wednesday afternoon in London at a price of 413.50p each.
By George Collard; [email protected]
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