Lockdown cost builder £1.3 billion in lost sales
Profits almost halve but future sales are now looking good
BRITAIN’S biggest housebuilder lost more than £1.3 billion in sales as a result of lockdown.
Revenues at Barratt homes dropped almost 30 per cent over the past year, to £3.42 billion.
Pre-tax profits, meanwhile, almost halved – to £492 million, compared with £910 million the previous year.
The impact of Covid-19 on the Leicestershire building giant saw the total number of homes built drop to 12,604 in the 12 months to June 30, compared with 17,856 a year earlier.
However, despite scrapping a special dividend payment, the business did say it had healthy sales looking ahead.
Chief executive David Thomas said: “While Covid-19 has had a significant impact on our results, our priority has been to keep our people safe, mitigate the effect of the pandemic on our business and be able to emerge from the crisis in a resilient position.
“Although uncertainties remain, all of our sites are operational, we are seeing very strong consumer demand and our robust financial position means we enter the new financial year with cautious optimism.
“We are now renewing our focus on our medium-term targets, on leading the industry in quality and service and on supporting jobs and economic growth by building the homes the country needs.”
Barratt said it spent more than £74 million dealing with Covid-19, including £45.2 million on extra safety, site and employee costs and an added £29.1 million for longer build times.
However, the business, based in Coalville, said it still had a good balance sheet with £308.2 million in the bank, down from £765.7 million.
Its finances have been strong enough for it to repay £26 million claimed under the furlough scheme.
The business said 85 per cent of its 6,700 workers had been placed on the scheme at the height of the lockdown.
Russ Mould, investment director at
stockbroker AJ Bell, said: “While Barratt talks of cautious optimism, its true assessment of the outlook is best reflected by its continuing decision to keep dividends off the table.
“This is a perfectly rational response. It is indicative of management’s suspicion the big jump in activity following the property
market’s emergence from deep freeze is due to a flood of pent-up demand, boosted by a stamp duty holiday, which will eventually ebb away.
“News of UK house prices hitting record highs may provide some short-term fizz for Barratt but there could be a lingering hangover to come.
“Unemployment and a buoyant housing market typically don’t make for good bedfellows.
“If Barratt is in for a period of weaker demand it will need to maintain a strong balance sheet as a buffer, ready for any eventual recovery. Relative financial strength would also allow Barratt to add to its land bank.”