• Issue 45

  • Mar 2019

The Source


Barratt on track to hit target

Barratt have reported that trading so far in 2019 is consistent with expectations and the volume housebuilder anticipates delivering a good financial and operational performance this year.

Half year results to December 2018 have confirmed that total completions at Barratt are up 4.1% to 7,622 – 6,078 of which were private, a rise of 6.4%. Revenue increased by 7.2% to £2,132 million and pre-tax profit was up 19.1% to £408 million. Net private reservations for this year currently stand at 0.74 per active outlet per average week (compared to 0.78 in 2018) but forward sales are up 7.3% at £3,021 million.

David Thomas, CEO at Barratt, commented: “The group has delivered a strong operational and financial performance across the half year. Operating efficiencies are delivering improved margins and our controlled and disciplined business model means we have a high quality land bank, strong forward sales, excellent financial position and efficient cash flow generation.

“Whilst we continue to monitor market conditions closely, current trading is in line with our expectations and we are confident of delivering a good financial and operational performance in FY19.”

Barratt added: “Whilst the imminent departure of the UK from the EU has created increased levels of economic and political uncertainty, the group is in a strong position, with a substantial net cash balance, strong balance sheet, healthy forward sales position and an experienced management team. The board will continue to monitor the market and economy. Our strong financial foundation provides us flexibility to take appropriate action where necessary. Given the uncertainties arising from the way in which the UK will depart from the EU, we have worked with our suppliers on continuity of supply of non-UK manufactured components, including product specification reviews, their holding additional inventories and review of logistic routes to seek to mitigate the potential for disruption.”

Impressive increases at Bellway…

Bellway have reported in a recent trading statement, ahead of its interim results next month, that they have achieved a record sales performance. Weekly reservation rate increased by 2.8% to 183, the highest achieved by the group in a first half trading period. In addition, Bellway completions were up by 5.6% ahead of last year to 5,007 homes in the six months to the end of January 2019, whilst total revenue is expected to rise by more than 12% to almost £1.5 billion. Private sales rate remain in line with last year at 136 reservations per week.

Paul Hampden Smith, Bellway Chairman said: “Bellway has delivered another strong trading performance, achieving growth in both volume and average selling price in the six month period.  Further, disciplined investment in high quality land, together with a sizeable forward order book, ensure that the group is well placed, over the longer term, to continue increasing its contribution to the supply of much needed new homes.  While the forthcoming exit from the EU is providing a degree of wider economic uncertainty, Bellway’s balance sheet is solid and the group retains its ability to respond positively to opportunities in the land market as they arise.”

Bellway added: “This is a robust performance given the ongoing discussion around our forthcoming exit from the EU, which has inevitably had some bearing on customer confidence in the wider economy” and whilst early signs confirmed that customer demand and reservations would probably  follow their usual seasonal trend, “the board remains cautious given the uncertainty regarding the UK’s forthcoming exit from the EU and the extent to which this will affect customer confidence.”

Healthy figures again for Redrow

Redrow has seen the new homes market “bounce back” in the first weeks of the year, following a quiet end to 2018. The housebuilder also remains confident that the Brexit uncertainty will not have “a huge impact” in 2019.

In their half year results, for the period to the end of December 2018, Redrow have announced that completions reached 2,970, up 12%, taking the total for the whole year to 6,042 (excluding joint ventures). Meanwhile, pre-tax profit in the period rose by 5% to £185 million whereas revenue increased by 9% to £970 million.

John Tutte, CEO at Redrow said: “The market fell away at the end of November into December about the time of the (Brexit) meaningful vote so we didn’t generate the leads in December which impacted January. But there has been improvement into early February – overall we are about 6% down and if you’d offered me that in December, I would have taken it.”

Tutte also declared that in spite of ongoing political uncertainty, the market was looking resilient, adding however that “London is different” due to the number of people working in the financial sector in the capital.

Meanwhile, Redrow chairman, Steve Morgan, who will be submitting their financial results before his retirement in March this year, 45 years after creating the company, pressed the Government not to allow the Brexit deadline to go beyond March 29th: “There is a tendency to blame everything on Brexit – it is highly disruptive of course but people just want to have it over and done with and we hope it is not delayed beyond March 29th,” he said. According to Morgan, stamp duty is a greater obstacle than Brexit, affecting nationwide transactions, although especially in London.

Tutte was of the same opinion: “Overall housing transactions have been flat at 1.1 million for a few years and this is due to stamp duty – stamp duty on a £500,000 house is £15,000 and people are saying ‘we’re not going to pay it’.”

Tutte also added that Redrow would not change their strategy before changes to the Help to Buy scheme, which will see regional price caps come into action past 2021: “The thresholds and boundaries are arbitrary – it’s a postcode lottery,” he said. “The threshold in Stratford-upon-Avon is £200,000 less than Banbury 20 minutes down the road. There is time for the Government to look at that.”

2018 annual NHBC registration figures released

During 2018, a total of 159,617 new homes were registered by developers with NHBC. This results in a 0.5% decrease on the 2017 figure (160,396).  Whilst the affordable sector remained consistent (42,120 in 2018 – 42,024 in 2017), the private sector dropped by 1% – 117,497 in 2018, compared to 118,372 in 2017. However, the final quarter of the year saw a 2% increase in new home registrations (40,513 compared to 39,736).

New home completions for the year also remained steady, going up by 1% on the 2017 total – 149,480 in 2018, 147,552 in 2017.

Eight of the 12 months in 2018 showed an increase in registrations, compared to the equivalent whole year period in 2017. Despite the awful weather that hindered the beginning of the year and the uncertainty in the industry around Brexit, there were 7 successive months of growth.

There was growth in 6 of the 12 UK regions in 2018, compared to 2017; in particular – Yorkshire & Humberside (+20%), the North West (+7%) and Northern Ireland (+39%). Whereas in London, new home registrations dropped by 10% in 2018 to 16,069 (17,932 in 2017).

NHBC Chief Executive, Steve Wood, commented: “The full year figures of nearly 160,000 new home registrations demonstrate the resilience of the UK housebuilding industry.  2018 has been a demanding year, with the extreme weather conditions in the early part and the continuing political and economic uncertainties, which are extending into 2019.  Whatever the environment, NHBC will continue to support housebuilders to deliver the high-quality, new homes that the country needs.”