Barratt’s profits plummet in challenging year

A “challenging year” for housebuilders sees revenue and profits fall for Barratt developments, in its latest financial results.

Revenue for the year to 30 June 2024 was £4.2 billion, down 21.7 per cent from £5.3 billion in the previous year.

The house builder generated £170.5 million in pretax profits, a 75.8 per cent plummet from £705.1 million, while gross profit fell 47.7 per cent from £974.9 million in 2023 to £509.5 million.

Meanwhile, the company delivered an operating margin of 4.2 per cent; compared to 13.3 per cent in the previous financial year.

Barratt Development’s balance sheet showed a net cash position of £868.5 million, £200.9 million down from FY2023 (30 June 2023: £1,069.4m), and a lower private orderbook left total home completions down 18.6 per cent to 14,004 (FY2023: 17,206).

David Thomas, chief executive of Barratt Developments PLC said: “We are pleased to have delivered total home completions at the upper end of our expectations for the year, despite the challenging backdrop.

“I am grateful to our skilled and dedicated teams of employees, sub-contractors and suppliers for continuing to deliver high quality homes that people want to live in. 

“We were delighted to complete the acquisition of Redrow plc in August and are now working constructively with the CMA to finalise competition clearance so that we can begin the integration process.

“Whilst demand continues to be sensitive to mortgage affordability, and reduced land buying activity during the past two years has had a near-term impact on the number of outlets we are operating from, we are well-positioned to meet the strong underlying demand for new homes of all tenures in the UK. 

“We welcome the Government’s proposed reforms of the planning system as one of the key levers to increase housebuilding, drive economic growth and tackle the chronic undersupply of high-quality, sustainable homes.”

Last month, deputy prime minister Angela Rayner announced the launch of a new “Homes Accelerator” taskforce to speed up the delivery of 200 stalled housing sites, potentially unlocking up to 300,000 new homes.

Julie Palmer, partner at Begbies Traynor, said: “It has not been an easy year for housebuilders, yet Barratt appears increasingly confident that a more tangible recovery is starting to take place in the market.

 “Labour’s plans to reinvigorate housebuilding, potentially with changes to planning rules, look set to lay the groundwork for Barratt, and the wider sector, to boost output. 

“The promising sounds from the Government, coupled with a more favourable macroeconomic backdrop, including an initial cut to interest rates and decrease in building cost inflation, should leave Britain’s biggest housebuilder well placed to deliver sustainable growth.

“However, Barratt is not in the clear yet. The £2.5bn merger with rival Redrow will amplify its recovery, but merging big businesses is no easy task.

“Plus, uncertainty still weighs heavily on the housebuilding sector as it waits for Labour’s promises to translate into real change.”

Was this interesting? Willmott Dixon secures £49m net zero Wigan campus

If you have a tip or story idea that fits with our publication, please contact the news reporter miles@wavenews.co.uk