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- Barratt Developments PLC on Wednesday unveiled a £200 million share buyback programme after reporting a record profit figure with the UK housing market supported by an ‘imbalance’ in supply and demand.
In the financial year to June 30, the housebuilder said statutory pretax profit slumped 21% to £642.3 million from £812.2 million a year before. This was largely due to a £408.2 million cost booked relating to legacy property costs and an industry pledge on building safety.
Stripping this cost out, adjusted pretax profit rose 15% to £1.05 billion - a record figure which matched consensus forecasts.
Revenue improved 9.5% to £5.27 billion from £4.81 billion.
Total completions increased by 3.9% to 17,908 from 17,243, which Barratt noted was a return to pre-pandemic levels.
Barratt upped its total shareholder payout to 36.9 pence from 29.4p. It has also approved a £200 million share buyback programme, with an initial £50 million tranche to be completed by the end of 2022 and the remainder before the end of June next year.
Chief Executive David Thomas said the firm made ‘fantastic progress’ in the period.
‘Our financial strength and operational excellence position us well to navigate the macro-economic uncertainties ahead,’ he said.
Looking ahead, Barratt is targetting total home completion growth of 3% to 5% in financial 2023, to between 18,400 and 18,800 homes.
Market fundamentals remain strong, it said, due to a continued ‘imbalance’ of housing supply being outstripped by demand.
As of August 28, its private wholly owned home completions were 55% forward sold, valued at £3.81 billion.
Assuming house price growth moderates over the coming months while build cost inflation remains elevated, Barratt expects its gross margin will move towards its minimum medium-term hurdle rate of 23%.
On an adjusted basis, its gross margin in the first half of 2022 rose to 24.8% from 23.2% a year before.
‘The board will continue to monitor and respond to changes in the market and the wider economy, but believes that our operating performance, forward order book and very strong financial position provide us with both the resilience and flexibility to react to changes in the operating environment in financial 2023 and as the market evolves thereafter,’ it said.
Barratt shares were up 0.9% at 425.80p in London on Wednesday morning.
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