Barratt sees profits surge in pandemic housing boom with demand for larger family properties soaring
Barratt Developments reported a surge in profits as it cashed in on the rebound in the property market.
The housebuilder said profits jumped 65.1 per cent to £812million in the 12 months to the end of June as revenues bounced 40.7 per cent to £4.8billion.
With demand for larger family properties soaring following the outbreak of Covid, Barratt sold 17,243 newly built homes, up from 12,604 in 2020 and just below the 2019 figure of 17,865 before the pandemic struck.
Housing boom: Barratt Developments said profits jumped 65.1 per cent to £812m in the 12 months to the end of June as revenues bounced 40.7 per cent to £4.8bn
Average selling prices also inched up during the year to £288,800 from £280,300 in 2020.
The group’s strong results were accompanied by a final dividend at 21.9p per share – a welcome boost for investors after the payment was put on hold in 2020.
The payout is also above the 19.5p received by investors in 2019. Despite the strong figures, shares in the firm slipped 4.5 per cent, or 33.4p, to 709.4p amid signs that demand levels could be cooling.
Barratt chief executive David Thomas said that the 2021 financial year had been a ‘particularly active period’.
He added there is still ‘very strong demand for houses across the country’ and that the firm will continue to work towards its medium-term target of completing 20,000 homes a year.
Barratt also noted strong forward sales activity into its new financial year, which currently stood at 15,734 homes compared to 15,660 a year ago, adding that construction activity to date is building 335 homes per week compared to 290 last year.
Despite jitters about demand, some brokers greeted the results positively, with analysts at Liberum saying the figures were ‘strong’ and that the market’s fears were ‘overdone’.
The broker did, however, say a lack of news on special dividends was ‘disappointing’ given Barratt’s £1.3billion cash balance.
The latter point was echoed by analysts at Peel Hunt, who said the large cash pile ‘points to a step up in dividends at some point’.