The UK’s largest house builder is targeting 15,000 home completions for the year ahead after experiencing a surge in demand for new homes after the end of lockdown.
Production rates are now back on track and the company is preparing to ramp up for new completions as well as entering the land market in the search for post-corona bargains.
Chief Executive David Thomas said “We are pleased that since the start of the new financial year we have seen our production increase, constructing the equivalent of 347 homes in the week ending 23 August and we are on track to deliver our planned output.
“Based on current market conditions, construction activity levels and assuming no further lockdowns, we expect to grow wholly owned completions to between 14,500 and 15,000 homes in FY21, and in addition around 650 completions from our joint ventures, whilst ensuring we maintain our industry leading standards of quality and service.”
The company is now focusing on rebuilding their completion volumes to reach 20,000 and said that the impact of Covid-19 cost the company £74 million. This figure was made up of safety costs (£45m), site costs and site-based employee costs and the increase in site durations (costing a further £29m).
Reporting that pre-tax profit had dropped to £492 million from last year’s £909.8 million following the impact of Covid to sales and production in the last financial quarter of the year, the company also said that recladding work to legacy orders cost them a further £39.9 million. They also made the decision to repay the government furlough grants in July costing a further £26 million.
Even though completions were down by 29% due to lockdown, the surge in demand has helped to get production output back on track. Thomas accredits this surge in demand to a combination of the Stamp Duty holiday, the understanding that the government’s Help-To-Buy scheme’s availability to only first–time buyers, regional price caps from April 2021 and pent-up demand from lockdown.
As further proof of the productivity ramp-up, Barratt managed to complete 60% more homes (1,439) in the last eight weeks than for the same period last year with total forward sales standing at 15.660 compared with 13,064 last year.
Thomas went on to say “While there continues to be economic and political uncertainty, the group is in a strong position.
“We have a substantial net cash balance, a well-capitalised balance sheet, a healthy forward sales position, a continued focus on delivery of operational improvements across our business and an ongoing commitment to deliver high quality homes across the country.
“We have therefore now re-entered the land market selectively, maintaining our disciplined approach, where we see attractive opportunities.”