Management at Barratt Developments yesterday struck a defiant tone as the ailing housebuilder sought to draw a line under a torrid 12 months and focus attention on shrinking debt and returning to growth.
Unveiling well-trailed preliminary results – sales down to £3.56bn (£4.09bn), pretax profit of £137.3m (£614.9m) and earnings per share of 25p (166.4p) – Mark Clare, chief executive, said the performance was 'satisfactory...in an extremely challenging market'.
The tone of Barratt’s presentation struck some observers as over-confident, particularly as the 12 months to the end of June were punished by a 94% fall in the company’s share price.
The results were hit by relatively modest writedowns on land, goodwill and commercial developments of £239m, a much lower figure proportionately than other builders, though more writedowns are expected next year.
Yet for Clare the focus was on the recovery Barratt has achieved since June, in particular the refinancing of the £1.65bn net debt it took on largely as a result of the £2.2bn acquisition of Wilson Bowden last year.
The refinancing has been the main reason for the tripling of the share price since the start of July, say analysts, as it gave hope to investors that Barratt could emerge unscathed from the downturn. It is a feat Taylor Wimpey, its equally indebted rival, is struggling to mimic. Barratt Developments has said it is prepared to shield homebuyers from a fall in house prices, in a desperate bid to inject some life into Britain’s slumping property market.
Financial Times, The Times, Daily Telegraph, Independent