Volume housebuilder, Barratt, has revealed that the coronavirus pandemic has significantly reduced completions, increased costs and impacted its profit. However, strong sales in recent weeks have been encouraging.
During its financial year ending June 30 2020, the firm’s total completions fell 29.4% to 12,604 against FY 2019. The average selling price of its homes rose slightly to £280,300 from 2019’s £274,400, with private ASP at £310,600.
Barratt’s pre-tax profit decreased by 45.9% to £491.8 million, “impacted by the unprecedented disruption to sales and build in our fourth quarter”. Revenue dropped 28.2% to £3,419.2 million, with profit from operations falling 45.2% to £493.4 million.
The business incurred total “Covid-19-related” costs of £74.3 million including £45.2 million of safety costs, non-productive site costs and site-based employee costs.
But, in the new financial year to date, sales across all of Barratt’s regions have been “encouraging”, with the business seeing net private reservations per average week of 314 (FY20: 250).
And in the eight weeks to August 23, completion volumes rose 62.4% to 1,439 homes against the equivalent period last year. Barratt said the increase was being driven by pent up demand, the stamp duty holiday and changes to the Help to Buy scheme from April 2021.
Barratt’s forward sales as of August 23 stood at 15,660 homes (August 25 2019: 13,064 homes) at a value of £3,706.5 million (August 25 2019: £3,037.5 million).
The business now expects its wholly-owned completions to increase to between 14,500 and 15,000 homes in FY 2021, “based on current market conditions, construction activity levels and assuming no further lockdowns”.
David Thomas, Barratt’s CEO, said: “While Covid-19 has had a significant impact on our results, our priority has been to keep our people safe, mitigate the effect of the pandemic on our business and be able to emerge from the crisis in a resilient position.
“Although uncertainties remain, all of our sites are operational, we are seeing very strong consumer demand and our robust financial position means we enter the new financial year with cautious optimism. We are now renewing our focus on our medium-term targets, on leading the industry in quality and service and on supporting jobs and economic growth by building the homes the country needs.”