Barratt Earnings: Cyclical Challenges Abound in Fiscal 2024 but the Long-Term Outlook Remains Robust

Barratt Developments’ fiscal 2023 delivery of 17,206 home completions and full-year pretax profit of GBP 884.3 million tracked our expectations and offered investors little surprise, given that the result had been effectively announced in conjunction with the U.K. homebuilder’s mid-July trading update. Barratt offered sparse incremental detail on its near-term outlook but reiterated the cyclical woes it faces in fiscal 2024. Conditions in the U.K. housing market remain downbeat, with U.K. mortgage interest rates having spiked once more in recent months, responding to a U.K. inflation rate that has proved more stubborn than in many other developed economies. Homebuyer demand remains consequently soft, with Barratt reiterating its cautious outlook for fiscal 2024 sales volume in the range of 13,250-14,250 home completions, representing a 20% year-on-year decline.