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Annual profits at Barratt set to beat expectations

07:33, 10th July 2024
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Annual profits at Barratt Developments are set to come in ahead of expectations, the housebuilder said on Wednesday, despite a "challenging" economic backdrop.

Updating on trading, the blue chip said total home completions in the year to 30 June were 14,004, down on 2023's 17,206 but at the upper end of its guidance range.

Total forward sales were in line with expectations. At the year-end, sales stood at 7,239 homes with a value of £1.9bn, compared to last year's £2.2bn.

Barratt, which earlier this year agreed to snap up smaller rival Redrow in a £2.5bn deal, said that as a result, final adjusted pre-tax profits were likely to be "slightly higher" than it had previously forecast.

David Thomas, chief executive, said: "During another year of economic and political uncertainty, we have delivered a strong operational performance.

"While we continue to navigate a challenging macroeconomic backdrop, we are delivering industry-leading build, sustainability and customer service. Combined with the strength of our balance sheet, this has ensured we remain resilient and responsive through the cycle."

Shares in Barratt jumped last week, along with other housebuilders, after Labour's landslide victory.

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

It continued: "Although the macro backdrop remains challenging, particularly demand sensitivity to current mortgage pricing and availability, and with lower average sales outlets, we anticipate total home completions, including joint ventures, will be in the range of 13,000 to 13,500 in the 2025 full year."

Barratt's planned merger with Redrow was backed by shareholders in May. The Competition and Markets Authority is currently investigating the deal, however, with its phase 1 review due to complete next month.

The UK housing market has been rocked in recent years, hit by low supply, surging inflation, higher interest rates and the cost of living crisis. It was dealt a further blow at the end of 2022, when the then government's disastrous mini budget sent mortgage rates soaring.

Both inflation and mortgage rates have since eased, but the cost of borrowing remains at a 16-year high while demand continues to outstrip supply.


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