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UK’s Barratt misses home completion target, shares tumble
Global Banking & Finance Review®
Company
By Aby Jose Koilparambil
(Reuters) -Barratt reported fewer home completions than expected for fiscal 2022, sending shares in Britain’s largest homebuilder down 4% on Thursday despite a profit forecast slightly above estimates.
The sector has faced sharp rises in energy prices and building materials such as steel as well as along with supply chain constraints and planning consent delays due to the pandemic.
One positive for major homebuilders has been red-hot house prices.
“While there are clearly macro-economic uncertainties ahead, the housing market remains robust, our forward order book is strong,” CEO David Thomas said in a statement.
Barratt completed 17,908 homes in fiscal 2022, below the 18,000-18,250 it forecast in February. That was up from 17,243 in 2021 a year earlier and also topped pre-pandemic 2019 when it completed 17,856.
It forecast an adjusted profit before tax for the year ended June 30 of between 1.05 billion pounds and 1.06 billion pounds ($1.24 billion-$1.26 billion), marginally ahead of a company-compiled analysts’ forecast of 1.048 billion.
Barratt reported a profit of 919.7 million pounds a year earlier.
The company’s mid-term guidance of 3-5% completions growth seems “reasonable”, analysts at Jefferies said in a note, adding that the margin outlook for fiscal 2023 was likely to fall.
Barratt shares were down by about 4% in early trade and the biggest percentage losers on the blue-chip FTSE 100.
British house prices rose at their slowest pace in more than a year in June as buyer demand softened slightly, a survey published on Thursday showed, sending the UK housing sector index down by more than 1%.
Last week, Britain’s second-largest housebuilder Persimmon lowered its annual volume target.
($1 = 0.8442 pounds)
(Reporting by Aby Jose Koilparambil in Bengaluru; editing by Rashmi Aich and Jason Neely)
A home completion refers to the final stage in the construction process where a residential property is finished and ready for occupancy.
Supply chain constraints are limitations or disruptions in the supply chain that affect the availability of materials and goods needed for production.
Adjusted profits are a company's earnings that have been modified to exclude certain one-time items or expenses, providing a clearer view of ongoing profitability.
A forward order book is a record of orders that a company has received for future delivery, indicating expected sales and revenue.
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