- Revenues, completions and margins at new record
- Another £200 million buyback in the works
- Halifax survey shows no drop in demand
Housebuilder Barratt Developments (BDEV) has unveiled a record set of results for the year to June and promised to return another £200 million of surplus cash to shareholders.
The shares were largely unchanged at 422p in early trading, which given the FTSE 100 benchmark was marked down 1.5% on fears over global growth ought to be seen as a positive sign.
BACK ON TRACK
Revenues for the year were up 9.5% to £5.27 billion, surpassing the pre-pandemic peak of £4.87 billion, while completions rose 3.9% to 17,908 homes, narrowly beating 2019’s record level.
Chief executive David Thomas called it ‘a year of fantastic progress, with completions recovering to pre-pandemic levels and excellent productivity across our sites’.
Operating profits rose 14.8% to £1.05 billion, taking the operating margin to 20% against last year’s record 19.1% margin, helped by house price inflation ahead of build costs and improved cost management.
Based on current market conditions, the firm is targeting a rise of 3% to 5% in completions for the year to June 2023 to between 18,400 and 18,800 units.
CASH-RICH
The company’s strong cash generation left it with net reserves of £1.14 billion at the end of June, giving it plenty of capacity to fund growth as well as enhance shareholder returns.
The final ordinary dividend was raised 17% to 25.7p resulting in a total ordinary dividend for the year of 36.9p, which puts the stock on an historic dividend yield of 8.7%.
The board also committed to return £200 million of surplus funds via a share buyback which it aims to complete by the end of June next year.
CRISIS, WHAT CRISIS?
Despite concerns about the strength of housing demand in the face of the cost of living crisis, the firm reiterated that market fundamentals remained strong due to the lack of supply of high-quality homes and good mortgage availability.
The company started the new financial year in a strong position with over 14,000 homes forward-sold for a value of £3.8 billion and said construction activity on its sites was fully back to normal.
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Demonstrating the strength of private demand, the price of an average house in the UK hit a new record of £294,260 in August according to the latest Halifax house price survey, an increase of 11.5% or more than £30,000 on last year.
Wales and the South West still show the strongest increases, with average house prices up 16% in Wales and 14.5% in the South West, while London - which had lagged the regions by some margin this year - saw its average price rise by 8.8%, the highest level in six years.
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