Tuesday, July 23, 2024

Barratt predicts pre-tax profit to exceed expectations

Barratt Developments Expects Profit Increase Despite Decline in Home Completions

In a recent trading update, Barratt Developments has announced that it expects its profit before tax to exceed previous expectations. Despite a projected 7% decrease in home completions for the upcoming financial year, the company remains optimistic about returning to growth in the following year.

The decline in home completions was attributed to high mortgage costs impacting demand, but Barratt anticipates that build cost inflation will stabilize. The company expressed support for the UK government’s focus on housebuilding and planning reform, seeing it as crucial to addressing the chronic undersupply of new homes and unlocking economic growth.

While the macroeconomic environment remains challenging, with demand sensitive to mortgage pricing and availability, Barratt expects total home completions to be in the range of 13,000 to 13,500 for the upcoming financial year. This includes completions from joint ventures, indicating a potential increase in homebuilding activity.

AJ Bell investment director Russ Mould commented on the trading update, noting the significant drop in completions compared to previous years. He highlighted the impact of interest rates on demand, as expected reductions in mortgage rates have not materialized as anticipated. However, Mould also pointed out positive signs of easing cost inflation in the sector, with Barratt planning to acquire more land for future development projects.

In addition to its operational updates, Barratt is currently awaiting approval for its proposed £2.5 billion merger with Redrow, which is currently under review by the Competition and Markets Authority (CMA).

Overall, Barratt Developments’ trading update reflects a mix of challenges and opportunities in the housing market. Despite facing headwinds such as high mortgage costs, the company remains confident in its ability to navigate the current environment and drive growth in the future. Stay tuned for further developments as Barratt continues to adapt to market conditions and pursue its strategic objectives.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. The content is based on general research and may not be accurate, reliable, or up-to-date. Before making any financial decisions, it is recommended to consult with a professional financial advisor or conduct thorough research to verify the accuracy of the information presented. The author and publisher disclaim any liability for any financial losses or damages incurred as a result of relying on the information provided in this article. Readers are encouraged to independently verify the facts and information before making any financial decisions.

Related Articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest Articles