Barratt Developments reports a 33% decline in full-year deliveries as COVID-19 strikes

on Jul 6, 2020
  • Barratt Developments reports a 33% decline in full-year deliveries as COVID-19 strikes.
  • The Coalville-headquartered housebuilder's average selling price tanks to £280,000.
  • The UK firm values its forward order book at £3.25 billion versus £2.60 billion last year.

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Barratt Developments (LON: BDEV) announced to have seen a roughly 33% decline in deliveries on Monday. The dovish report was attributed to the Coronavirus pandemic that brought construction activity in the United Kingdom to a near halt in recent months. The British homebuilder, however, expressed confidence that early signs of recovery are now starting to show with the start of the new financial year.

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Shares of the company opened about 3.5% up on Monday and jumped another 3.5% on market open. At 527 pence per share, Barratt Developments is roughly 30% down year to date in the stock market after recovering from an even lower 365 pence per share in March. Learn more about how to invest in the stock market.

Barratt Developments average selling price tanks

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In the year that ended on 30th June, Barratt said that it completed about 12,604 homes as compared to a much higher 17,856 homes last year. As of 30th June, the housebuilder valued its forward order book at £3.25 billion versus the year-ago figure of £2.60 billion. According to Barratt:

“Since the removal of government restrictions on housing market activity on 13th May 2020, there has been a welcome recovery in internet activity, site visitors, and net reservations across both the industry and our business.”

Barratt said that its average selling price in the recently ended year came in lower at £280,000 versus £320,000 in 2019. The residential property development company has resumed work at all of its sites as of 30th June. Barratt also said that it will repay £25 million claimed under the state-backed furlough scheme.

In the long run, however, the largest housebuilder of the United Kingdom also warned that the outlook remains uncertain for the housing market and the economy at large due to COVID-19 that has so far infected more than 285,000 people in the UK and caused over 44,000 deaths.

BoE data shows record-low mortgage approvals in May

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In mid-May, the British government decided in favour of easing COVID-19 restrictions for the housing market. The Bank of England, however, published data last week that suggested mortgage approvals to have slumped to the lowest on record in May.

In a bid to shore up finances amidst COVID-19, Barratt suspended its dividend payments for the year including the special dividend that it announced earlier.

At the time of writing, the Coalville-headquartered company has a market cap of £5.37 billion and a price to earnings ratio of 7.20.

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