Barratt’s shares fell as much as 3% in early trading this morning after the home builder released annual results that showed its current reservation rate is below levels immediately after the spring 2020 lockdown.
The decline came despite Barratt’s results by June 30 this year showing a strong recovery from the pandemic. Sales of 4.81 billion
The company also reported a pre-tax profit of $ 812.2 million.
However, the company said it would be between July 1 and December 22.
In the same period last year, the company recorded 0.94 reservations per location per week. However, the number is above the 0.68 reservation rate reported during that period in 2019.
Barratt managing director David Thomas (pictured left) said the apparent decline in reservation rates was due to the fact that “the year-on-year comparison was a particularly active period, reflecting both the need to catch up after the national lockdown and the increased aid.” Purchase reservation activity prior to changes that would remove existing homeowners access to purchase assistance ”.
The company also said it saw construction costs grow 4% to 5% in 2021 and expected a similar rise in costs in 2022. It also confirmed that it had written off £ 81.5 million in fiscal 2021 to pay the cost of repairing “old” properties in the face of the building security crisis. Additional costs of around £ 40 million are expected for fiscal 2022.
Still, Barratt reported that any increases in construction costs were offset by rising sales prices, with the price growth causing the company’s gross margin to increase by nearly 1% even when the increased construction costs were factored in.
The company said sales increased to 17,423, up 36.8% from 2020 and just 3.4% below the 17,856 in 2019 before the Covid crisis. The performance is well on the way to surpass the 2019 numbers by 2022 with almost 18,000 completions.
Barratt also added more than £ 1 billion in cash to its balance sheet in the year, with net cash rising from £ 308 million in June last year to £ 1.32 billion at the same time this year, an achievement the company said that it “enables our growth”. Plans”.
Joshua Raymond, director of finance brokerage firm XTB, said Barratt’s results were “strong”, pointing out that the company’s shares had risen 9% in the past six weeks since it raised earnings expectations. He said, “The stock price’s somewhat subdued response is more likely to suggest that those results were already priced into its stocks after the company reported in July that annual earnings would be slightly above consensus.”
He added: “One thing to watch out for is net reservation rates, which have fallen 11.7% since the beginning of July compared to the lockdown at the beginning of the year, suggesting a slowdown in demand for the broader UK Market could indicate. ”
Stocks of other home builders, including Taylor Wimpey and Persimmon, also briefly dipped into the news before rebounding. Stock price moves follow yesterday’s gains after Nationwide reported stronger-than-expected house price data for the UK yesterday.
David Thomas said the business had “made excellent progress” this year. He said: “We started the new financial year with a strong position and, despite the uncertainties still ahead, we are benefiting from our strong balance sheet, the visibility of the order backlog and the construction activity to date.”
Barratt’s stock was trading at 732p when Housing Today went to press, 1.4% below last night’s closing price.