A mixed trading update from housebuilder Barratt Developments (BDEV) prompts a decline of 1.7% to 406.3p as the company's 'too early to say' take on the impact of Brexit sounds a gloomy tone.

The downbeat asssessment drags down housing stocks, Berkeley (BKG) and Persimmon (PSN), down 2.7% and 1.5% respectively.

Barratt reports a 20% rise in pre-tax profit to £680 million for the 12 months to 30 June in line with expectations, which was supported by more total completions, including joint ventures, due to strong consumer demand.

Profit from the housebuilder’s 11 joint ventures is expected to rise from £45. 4 million in 2015 to £72 million.

Net cash at the end of the financial year is ahead of expectations at £590 million, as a result of higher volume of completions and the timing of land payments.

Liberum expects a slowdown in UK gross domestic product growth to impact the housing sector, recommending investors hold off investing in Barratt.

The broker believes Barratt’s low margins makes it sensitive to a volatile environment.

Davy Research is more upbeat, noting the company’s fundamentals are still strong and that it made good progress over the last financial year, despite a clouded outlook looming over the sector.

Barratt itself says: ‘the immediate outlook for our industry is less clear and it is too early to draw any conclusions regarding market conditions from the short trading period since the referendum’.


Issue Date: 13 Jul 2016