UK supply chains facing ‘perfect storm’ as Christmas challenges loom – business live

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Barratt Developments has said strong demand for houses across the country helped to boost annual profits by nearly two-thirds in its latest financial year, as it signalled continued strong demand for housing across the UK even as the government pulls back coronavirus pandemic support.

Britain’s second-largest housebuilder by market value, reported profits before tax of £810m for the year to the end of June, compared with £490m in the previous year, and said a strong forward sales book was encouraging for the year ahead.

Barratt’s revenues for the financial year at £4.8bn were only 1% lower than the equivalent in 2019, before the effects of the pandemic. It completed 17,200 houses, only 600 behind 2019 and 4,600 ahead of the 2020 financial year, which included the first national lockdown.

David Thomas, Barratt’s chief executive, said the company had made “excellent progress this year”.

“We have begun the new financial year in a strong position and, whilst there are still uncertainties ahead, our strong balance sheet, forward order book visibility and construction activity to date all stand us in good stead. There is very strong demand for houses across the country.”

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Barratt is also experiencing the impact of rising raw materials costs (with timber, cement, bricks, steel and copper having all jumped in price).

Russ Mould of AJ Bell says:

“Further price increases would help the builder offset increases in input costs which the company says are proving persistent (despite central bankers’ insistence to the contrary. Barratt’s results presentation flags its expectation that input costs will rise by 4% to 5% in the year to June 2022.

“However, price increases raise the question of affordability. The stamp duty break has helped here and so has Help-to-Buy.