Barratt shares fall despite assurances it’s confident in the face of Brexit
That sad "wah, wah, waaah" trombone you heard this morning was coming from the general direction of housebuilder Barratt, which attempted to restore investor confidence with assurances over Brexit – only to have its shares drop anyway.
In a statement this morning the company, whose shares have fallen almost 30 per cent since the result of the EU referendum was announced, said it remains "confident", despite what doom-mongers might say.
Have punters stopped buying homes? Barratt chief executive David Thomas thought not.
Following the EU referendum, it is too early to say what the impact of the uncertainty facing the UK economy will be.
The sector continues to receive focused government support, mortgage availability is good and there remains an undersupply of new homes. With a strong balance sheet and forward order book, and industry leading quality and customer service, we remain confident in the positive fundamentals of both the housing sector and our business.
But alack, alas: having regained some of their momentum over the past few days, shares in Barratt fell as much as 5.1 per cent in early trading, to 392.2p. Ouch.
It presumably didn't help that in an otherwise strong trading update, it showed total forward sales were down 0.5 per cent, to £1.76bn, in the year to the end of June. That might not be a big drop – but it's the first time in a while growth has fallen.
Meanwhile, total completions rose 5.3 per cent to 17,319, while average selling price rose 10.6 per cent to £260,000. Net cash rose to £590m, from £186.5m, ahead of expectations.
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It added that government policies to increase housebuilding, such as the extension of Help to Buy (which provides buyers with financial support) and the Starter Homes Scheme, which aims to build 200,000 homes by 2020, had helped.
"Our dividend plan was announced in September 2014 and remains to deliver attractive future cash returns through an ordinary dividend of one third of earnings and a special dividend of £400m in aggregate with made or planned payments of £100m, £125m and £175m over the three years to November 2017," it said.
Analysts, meanwhile, were cautions.
"While Barratt has plans in place to reduce risk, it’s unlikely these could fully insulate the group from a nasty downturn," said George Salmon, equity analyst at Hargreaves Lansdown.
"That said, the result of the vote won’t change every factor affecting the industry, and some supportive factors will remain.
"Britons will still want to own homes, whether in or out of the EU, government schemes such as Help to Buy will almost certainly be unaffected, and the UK still faces a major housing shortage. What’s more, interest rates look likely to stay lower for longer, which should continue to support mortgage affordability." Not all bad, then.