Barratt Developments reveals £200m share buyback and boosts dividend as UK’s biggest homebuilder posts record annual profits
- Barratt has also increased its recommended final dividend to 25.7p per share
- The FTSE 100 group made a record adjusted pre-tax profit of £1.05bn
- Low mortgage rates and undersupply have boosted the UK property market
Barratt Developments has announced a share buyback program worth up to £200million as its chief executive hailed a “year of fantastic progress”.
Leicestershire-based Barratt, who is Britain’s biggest homebuilder, told investors he had contracted Credit Suisse to initially buy up to £50million this year before completing the amount remaining by the end of June 2023.
The group also raised its recommended final dividend to 25.7p per share, having more than quadrupled shareholder payouts to £337m in the past financial year.
Barratt’s release of its annual results comes as figures from Halifax Bank showed average UK house prices hit a record high of £294,260 in August.
Strong demand for newly built properties, coupled with soaring prices, helped the FTSE 100 company post record adjusted pre-tax profits of £1.05billion for the 12 months to June 30.
It completed construction of 17,908 homes in the period, which was just ahead of pre-pandemic levels as the UK property market continued to be affected by low mortgage rates and undersupply. chronic.
These factors have helped the average sale price of Barratt houses to hit the £300,000 mark, as has the temporary stamp duty holiday and the growing desire of Britons to live in more spacious accommodation.
CEO David Thomas said: “This year has been a year of fantastic progress, with completions returning to pre-pandemic levels and excellent productivity at our sites.”
Barratt’s release of its annual results comes as figures from Halifax Bank showed average UK house prices hit a record high of £294,260 in August, an increase of 11.5% from a year to year.
This is despite the Bank of England raising interest rates for the sixth consecutive time last month in response to soaring inflation.
Drop: Barratt Developments shares have fallen 44% since the start of the year
But even as housing costs continue to rise, analysts predict that the worsening cost of living crisis affecting British consumers will eventually impact the property market.
Richard Hunter, Head of Markets at Interactive Investor, said: “Rising interest rates could impact consumer confidence, and there are also signs of a market slowdown in terms of property prices.
“The withdrawal of the purchase assistance program in its current form could also dampen demand, even if the availability of mortgage loans remains high.
“Higher household energy costs, which could benefit from some relief from the new Prime Minister, are also a pet peeve at present, as is the wider inflationary environment.”
Barratt said economic uncertainty was partly behind its net private booking rate per site from early July to late August falling to 0.60 from 0.70 in the equivalent pre-pandemic period.
Still, the company is targeting 18,400-18,800 more home completions this financial year, while its forward order book stands at £3.81billion, about the same as in August 2021.
Shares of Barratt Developments fell 1.35% to 416.5p late Wednesday afternoon, meaning their value is down around 44% year-to-date.