Barratt Developments pre-tax profit tanks 45.9% in fiscal 2020

Barratt Developments pre-tax profit tanks 45.9% in fiscal 2020
Written by:
Wajeeh Khan
2nd September, 10:11
Updated: 2nd September, 10:12
  • Barratt Developments pre-tax profit tanks 45.9% in fiscal 2020.
  • The British housebuilder's annual revenue slides 28%.
  • Barratt says dividend will be reinstated as soon as possible.

Barratt Developments (LON: BDEV) said on Wednesday that its full-year profit came in lower than last year. The company decided in favour of suspending its special dividend but expressed confidence that home completions and sales will improve in the new fiscal year. Mortgage lender Nationwide also said on Wednesday that house prices in the UK were at an all-time high.

Shares of the company were almost flat in premarket trading on Wednesday but jumped about 7% on market open. Barratt developments is now trading at 540 pence a share versus a low of 365 pence per share in March. The stock had started the year 2020 at a much higher 752 pence a share. Confused about choosing a reliable stockbroker to trade online? Here’s a list of a top few to make selection easier for you.

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Barratt Developments annual revenue slides 28%

The housing market took a massive hit in the United Kingdom due to the Coronavirus pandemic that brought activity to a near halt in late March when the government resorted to a countrywide lockdown. Home sales in recent weeks as Britain eased COVID-19 restrictions, however, has shown signs of recovery.

According to CEO David Thomas:

“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.”

As of 23rd August, the UK’s largest housebuilder recorded 15,660 of forward home sales valued at £3.71 billion as compared to 13,064 in the previous year. In terms of pre-tax profit, Barratt printed £491.8 million that represented a 45.9% decline in the year that concluded on 30th June. The British firm valued its COVID-19-related costs at £74.3 million.

The residential property development company said it earned 39.4 pence a share in fiscal 2020. In 2019, its per-share earnings were noted at a much higher 73.2 pence. At £4.42 billion, its annual revenue saw a 28% decline. Barratt completed 12,604 units in the recently ended financial year versus the year-ago figure of 17,856 units.

Barratt says dividend will be reinstated as soon as possible

The average price per unit tanked from £320 thousand last year to £280 thousand as per Barratt’s report on Wednesday.

As per the company’s board, dividend payments will be reinstated as soon as financially viable. CEO Thomas said:

“We enter fiscal 2021 focused on rebuilding both our completion volumes and our financial performance towards our unchanged medium-term targets.”

At the time of writing, Barratt Developments is valued at £5.49 billion and has a price to earnings ratio of 7.36.

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