Residential property developer Barratt Developments plc (LON:BDEV) plans to start the new financial year with “cautious optimism” on the back of surprisingly resilient trading figures, with a total of around ¥2,500 He announced that he intended to repay £10,000. Pay furlough fees to welcome staff back.
Following this news, the company’s stock price rose an astounding 6.67%.
Incredible resilience, flexibility and dedication.
The company’s futures order book is decidedly rosy, with total future sales as at 30 June 2020 of 14,326 units (30 June 2019: 11,419 units), for a total of £3,249.7 million (2019 30 June: £2,604.1 million).
Since reopening all locations, the company has recorded “high levels of customer interest”, with net private bookings per store per week of 0.63 (2019: 0.69) for the past six consecutive weeks. ) was almost the same as the previous year.
Barratt “acted quickly” at the start of the coronavirus pandemic, closing all offices, construction sites and sales centers on March 27, 2020. The company canceled its interim dividend scheduled for May and implemented a voluntary 20% reduction. Basic salary for “Executive Directors, wider Executive Director and Regional Managing Director teams, Chairman and Non-Executive Directors”.
Although housing completion rates were significantly impacted by the lockdown, with only 12,604 total homes built during the year, including joint ventures, compared to 17,856 in 2019, the company’s strong forward orders A strong book and balance sheet offset other disappointing numbers.
Around 85% of Barratt’s 6,700 UK employees were furloughed when the government imposed a forced lockdown at the peak of the pandemic. The company’s surprisingly strong performance at the end of the quarter gave CEO David Thomas the opportunity to repay the government in full.
In a message included in Mr Barratt’s trading update, Mr Thomas commented:
“Prior to the onset of the COVID-19 pandemic, the Group had a year of strong progress in both sales and margins. Although the pandemic caused significant disruption, the Group’s advanced technology and our experienced team have shown incredible resilience, flexibility and dedication both during the peak of the crisis and during the cautious reopening of our sites.”
Optimism is ‘unfounded’
Russ Mold, investment director at AJ Bell, weighed in on Barratt’s news and enthusiastically praised the company for outperforming expectations.
“The tenor of today’s trading update from Barratt Developments resonated with the market, as any kind of optimism, cautious or otherwise, is welcome in the current climate. This is not unfounded: the company’s order volume has increased, customer interest has been high since the reopening of its sales centers, and all sites are now operational.”
Of course, it wasn’t all good news. Mr Barratt’s home completions were significantly affected by the lockdown, which no doubt contributed to the near paralysis of the UK housing market at the peak of the pandemic.
“There were negatives that offset the positives in Mr Barratt’s statement. Inevitably, completions fell in the 12 months to the end of June, and average asking prices also fell. Dividends still on the table. , but it doesn’t seem like the market was expecting anything different in terms of that score.”
In a bid to get the market back into action, Chancellor of the Exchequer Rishi Sunak is expected to announce stamp duty relief for properties worth less than £500,000 on Wednesday as part of his “mini-Budget”. This news will no doubt be welcomed with open arms, but while the market is in dire need of liquidity, first-time buyers will still struggle to get onto the ladder in the first place.
Investor Insights
Meanwhile, Barratt’s share price rose 6.67% or 32.70p to 523.00p at 13:41 BST 06/07/20 on the back of the company’s optimistic numbers. The company’s dividend yield is 0.056% and P/E ratio is 7.15 times.
