Shares in Barratt Developments rose today as it announced strong forward sales despite taking a hit from the coronavirus lockdown.
Forward sales at 23 August stood at 15,660 homes valued at £3.7bn, compared to 13,064 homes valued at £3bn last August.
Barratt shares rose 5.7 per cent to 532p this morning.
The company today scrapped a special dividend payout as it reported a 45 per cent drop in pre-tax profit.
The UK’s biggest housebuilder said pre-tax profit fell 45.9 per cent to £491.8m in the year to 30 June.
The company reported a nearly 30 per cent fall in full-year housing completions and revenue, while forward sales were up from the year-ago period.
Barratt pulled a special dividend of £175m which would have been payable in November 2021 citing the impact of Covid-19
The company had previously cancelled its £100m interim dividend and said it would not propose an ordinary dividend for 2020 or the intended £175m special dividend for 2020.
Total home completions fell 29 per cent to 12,604. Revenue dropped 28 per cent to £3.3bn.
Net cash fell 59 per cent to £308.2m at year end.
Barratt said Covid-19-related costs were £74.3m, comprising £45.2m of safety costs, non-productive site costs and site-based employee costs and £29.1m related to an expected increase in site durations.
Chief executive David Thomas said: “While Covid-19 has had a significant impact on our results, our priority has been to keep our people safe, mitigate the effect of the pandemic on our business and be able to emerge from the crisis in a resilient position.
“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.
“We are now renewing our focus on our medium term targets, on leading the industry in quality and service and on supporting jobs and economic growth by building the homes the country needs.”
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said:
“Barratt’s full year results out today show just how badly the coronavirus hit the house builder…But all of Barratt’s operational sites reopened by 30 June, and since then customers have been flocking back to showrooms. The pent up interest has inevitably also been fuelled by the stamp duty holiday and the company says a robust financial position means that the firm is entering the new financial year with ‘cautious optimism’.
“That has, no doubt, been helped by the summer mini boom in the housing market with the building society Nationwide reporting today that prices are up 3.7 per cent year on year, with August seeing the biggest monthly rise in house prices since 2004.
“But the real question is how long will this last, given that the UK is still reeling from a brutal 20.4 per cent economic contraction between April and June.
“The next few months are crucial for Barratt because, while the group demonstrated its strength during the lockdown, an extended recession would prove an even tougher test. The tax payer funded furlough scheme, mortgage holidays and a ban on evictions are all due to be unwound in the autumn, which all could have major implications on demand for housing going forward.’’