Barratt restores build rates as sales surge
Britain’s biggest house builder Barratt has got its production rates back on track and is now targeting 15,000 home completions for the year ahead.
Chief Executive David Thomas said the firm has enjoyed a surged in demand for homes since the lockdown ended and had ramped up production rates.
He said Barratt had also re-entered the land market looking to pick up bargains.
Thomas said: “We are pleased that since the start of the new financial year we have seen our production increase, constructing the equivalent of 347 homes in the week ending 23 August and we are on track to deliver our planned output.
“Based on current market conditions, construction activity levels and assuming no further lockdowns, we expect to grow wholly owned completions to between 14,500 and 15,000 homes in FY21, and in addition around 650 completions from our joint ventures, whilst ensuring we maintain our industry leading standards of quality and service.”
He added Barratt was focused on rebuilding completion volumes to its medium-term target and capacity of 20,000 homes.
Announcing latest results for the year to June, Thomas said extra costs from Covid-19 hit £74m.
This comprised pf £45m of safety costs, non-productive site costs and site-based employee costs and £29m related to an expected increase in site durations.
The house builder said pre-tax profit had plunged to £492m (2019: £909.8m), impacted by the unprecedented disruption to sales and building in the final quarter.
Barratt also booked legacy properties costs of £39.9m relating to recladding work and decided in July to repay £26m in furlough grants from the Government.
Completions fell 29% to 12,604 homes as a result of the lockdown, with group revenue down a similar amount to £3.42bn.
But Thomas said demand had rebounded strongly this summer stimulated by a combination of pent-up demand, the Stamp Duty holiday and an understanding that Help to Buy will only be available to first-time buyers and regional home price caps will exist from April 2021.
He said: “The sales performance across all regions in the new financial year to date has been encouraging, with net private reservations per average week of 314 (FY20: 250), resulting in net private reservations per active outlet per average week of 0.94 (FY20: 0.68).”
Barratt also enjoyed a substantial increase in home completion volumes in the last eight weeks, up over 60% at 1,439 homes compared to the same period last year.
Total forward sales stand at 15,660 homes compared to 13,064 homes a year ago.
Thomas said: “While there continues to be economic and political uncertainty, the group is in a strong position.
“We have a substantial net cash balance, a well-capitalised balance sheet, a healthy forward sales position, a continued focus on delivery of operational improvements across our business and an ongoing commitment to deliver high quality homes across the country.
“We have therefore now re-entered the land market selectively, maintaining our disciplined approach, where we see attractive opportunities.”