Barratt Developments completions outlook cut "disappointing"

(Alliance News) - Barratt Developments PLC shares fell after a good-news-bad-news update on Wednesday, with the housebuilder raising profit guidance for the financial year just gone, but cutting its outlook for home completions for the new year.

Barratt shares traded 1.5% lower at 483.87 pence each in London on Wednesday morning.

Leicestershire, England-based Barratt Developments said total home completions are at the upper end of guidance range for financial 2024 at 14,004, down 19% from 17,206 a year prior.

Adjusted pretax profit for the financial year that ended June 30 is anticipated to be slightly ahead of previous expectations.

But Barratt expects home completions to fall again in the coming financial year in a range of 13,000 to 13,500. In February, Barratt forecast completions of between 13,500 to 14,000 for financial 2025.

"Due to lower land buying activity in the last two years, Barratt has seen active sales outlets fall by 6% in FY24; in FY25, outlets are now expected to fall by a further 9%. This has been the main driver of a lower volume outlook for FY25. The group is guiding to full year unit completions in the range of 13,000-13,500, which is[around] 5% behind current Visible Alpha consensus forecasts," analysts at Davy commented.

Stifel said the guidance is "disappointing" and the home completions outlook sits 8% off the broker's estimate.

Stifel rates the stock at 'hold'.

"Shares look fairly valued on a standalone basis, with upside if the market comes to see Redrow as a good deal strategically as well as financially," Stifel analysts added.

Barratt in February agreed an all-share takeover offer for its smaller peer Redrow, valuing the latter at GBP2.52 billion.

Barratt Chief Executive Officer David Thomas said Wednesday: "Looking ahead, we are pleased that the proposed combination with Redrow was strongly supported by both sets of shareholders in the Spring and, subject to the CMA's approval, we look forward to bringing together two businesses to create an exceptional UK housebuilder ensuring we are well-positioned for the future."

In other housebuilder M&A action on Wednesday, Crest Nicholson Holdings PLC said it is minded to accept a revised bid proposal from Bellway PLC.

Under the revised terms, Crest Nicholson's shareholders would receive 0.099 shares in Bellway for each share they own plus a 4 pence per share dividend. This would comprise a 1p per share dividend and 3p per share special dividend.

Under the terms of the proposal, Crest Nicholson's shareholders would hold 18% of the enlarged group's share capital.

Crest shares were up 3.7% to 247.40p on Wednesday, while Bellway shares were down 0.6% to 2,564.95p.

By Eric Cunha, Alliance News news editor

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Crest Nicholson

Bellway