Barratt scraps dividend, pulls financial guidance as sites close
By Abigail Townsend
Date: Wednesday 25 Mar 2020
(Sharecast News) - Barratt Developments has cancelled its dividend and suspended all financial guidance after shutting down its construction sites in the wake of the coronavirus outbreak.
Britain's biggest house builder is closing its sales centres, construction sites and offices. It follows government advice on Monday that people should only leave their homes to work under very limited circumstances, and to stay at least 2 metres apart from other people if they do.
Updating investors on the decision on Wednesday, Barratt said: "While it is too early to make a reliable forecast about the duration or impact of the pandemic, and with our sites now closing, the board expects it to have a significant impact on both construction output and reservations."
The blue chip has suspended all land buying activity, halted recruitment, postponed non-essential capital expenditure and said it was "actively" manging cash flow while ensuring suppliers and sub-contractors continued to be paid.
It has also cancelled the interim dividend of 9.8p per share, saving around ?100m, and said it would consider reinstating payouts at the full-year results in September.
Regarding trading, Barratt said the calendar year had got off to a strong start, with trading in line with expectations until last week. It delivered 10,364 home completions in the period to 22 March, compared to 9,437 a year earlier, of which 2,050 were completed since 1 January, up on the 1,815 recorded in the same period in 2019.
Total forward sales were 13,836 homes with a value of ?3,298.2m, including joint ventures.
But the firm noted: "However, as Covid-19 has gathered pace in the UK, and since the introduction of increased social distancing guidelines, there has been a reduction in reservations and site visitors, and an increase in cancellations."
Barratt said it in a "position of strength, with a robust balance sheet, a highly skilled workforce and an experienced board".
But it conceded: "Given the ongoing uncertainty, we are able to quantify the impact of Covid-19 on our financial and trading performance at this stage. Accordingly the group is suspending all existing financial guidance."
As at 1430 GMT, shares in Barratt were ahead 2% at 417.1p. The stock has fallen heavily as the Cover-19 crisis has worsened, however, falling from highs in February of more than 870.0p.
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