Barratt sees profits tumble

Financial results for Barratt Developments show Britain's biggest house-builder performing at the upper end of expectations in what has been a difficult year for most of the industry.

For the year ended 30^th June 2024 Barratt generated revenue of £4,168m, down nearly 22% from the previous year’s £5,321m.

Profit before tax was down nearly 76% at £170.5m (2023: £705.1m).

Barratt Developments had delivered an operating margin of 13.3% in the 2023 financial year; in FY 2024 this was 4.2%

Total home completions were down nearly 19% at 14,004 (2023: 17,206).

Chief executive David Thomas 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 [Competition & Markets Authority] 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."

Begbies Traynor partner Julie Palmer commented: “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 house-builder 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.

“That said, if the long expected recovery does start to materialise, Britain’s largest housebuilder looks well positioned to cement its place in the market and build towards a future of sustained growth.”

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