04 September 2024
If you are covering Barratt Development’s latest financial results, please find below a comment from Oli Creasey, property research analyst at Quilter Cheviot:
“Barratt Developments has announced a set of full year results this morning that contains very few surprises for a major housebuilder. Slow sales rates and falling operating margins are hampering Barratt, along with a number of other UK housebuilders. Barratt also recently announced the finalisation of the merger with Redrow, and are working with the CMA to integrate the businesses without falling foul of competition law.
“What is most notable is the guidance for the year ahead. Management expects housing completions to be 5% lower next year, (in a range of 13-13,500, vs 14,000 this year), which is the opposite direction of travel to what we’d expect. The company has justification for this – it is intentionally opening fewer outlets next year, partly to reflect demand but also the recent land-buying volumes (which have also been low). The indication is that sales per outlet figure should improve, but only marginally, again by around 5%. So, while the bottom of the trough in the housing market seems to have been found, it may take another year to return to meaningful growth, or at least for Barratt.
“While management has noted that the housing market remains subdued, it has welcomed signs of planning reform by the Labour government, believing this will be key to tackling undersupply, and unlocking economic growth in the UK.”
