Barratt Redrow shares sank sharply on Tuesday morning, after the FTSE 100 company warned that legacy issues would hit profits and announced lower-than-expected completions.
At 377.4p per share, Barratt was the UK’s worst-performing blue chip share and down 9.4% on the day.
The builder said it expected to book “additional legacy property liabilities” of £248 million following its acquisition of Redrow last year.
Some £98 million of these liabilities relate to fire safety and issues with reinforced concrete frames that materialised during the second half, it said.
Stripping out these adjustments, the company predicted adjusted pre-tax profit would meet market expectations.
It achieved cost synergies of £69 million from the Redrow tie-up. It has targeted total savings of £100 million.
Completions Drop
Barratt said total home completions came in at 16,565 during the 52 weeks to 29 June. This was down from 17,972 in the prior financial year, and below a forecast 16,800-17,200.
This included 538 joint venture completions, roughly in line with financial 2024 but below a targeted 600.
Barratt said that its completions miss was chiefly down to fewer international and investor completions in London.
For the current financial year, Barratt predicted total completions of between 17,200 and 17,800, including 600 completions from its joint ventures.
The company maintained its medium-term target of 22,000 completions per year.
The housebuilder finished financial 2026 with net cash of £772 million, down from £868.5 million in the prior period but above expectations.
The business also announced plans to repurchase up to £100 million of its shares by the end of the current financial year.
Positive Outlook
Chief executive David Thomas commented that “against a challenging market backdrop, we have delivered a solid performance this year. Our adjusted profits are in line with market expectations, despite home completions being slightly below our guided range.”
He said that “although demand during the year has been impacted by consumer caution and mortgage rates not falling as quickly as hoped, there remains a long-term structural under-supply of housing in this country.”
Thomas added that “our increased scale, three market-leading brands and strong land pipeline put us in a unique position to rapidly accelerate volume delivery as consumer confidence strengthens and the benefits of planning reform materialise at a local level.”
Mixed Reception
Analyst Aarin Chiekrie of Hargreaves Lansdown commented that “Barratt Redrow’s been ticking along nicely over the last year, despite some hurdles such as increased stamp duty and slow changes to increasing planning approvals.”
He added that “sales rates are moving in the right direction and the integration of the Barratt and Redrow businesses has continued at pace,” despite home completions missing expectations.
Mark Crouch, analyst at eToro, said Barratt’s share price fall shows that “even well-built businesses can struggle when the ground beneath the sector begins to crack.”
He said that “despite government assurances, planning reform remains sticky, while build costs are still elevated, and demand is softening as high interest rates and fiscal drag weigh on affordability.”
Royston Wild owns shares in Barratt Redrow
This article was written by Royston Wild from Forbes and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.