Barratt Development PLC saw its annual profits tumble by 21% as the rising cost of remedial cladding repairs bit into margins at the UK housebuilder.
Revenues rose by almost 10% to £5.2bn in the year to end June 2022, as the number of housing completions rose by 4% to 17,908.
Profits, however, dropped by 21% to £642mln as Barratt took a £396.4mln charge to meet its commitment to the government’s building safety repairs pledge.
That was brought in on properties over 11 metres high in the wake of the Grenfell Tower disaster.
Without the cladding charge, adjusted profits rose by 15% to £1.06bn and the company raised its annual dividend by 26% to 36.9p and also announced a £200mln share buyback.
Net cash at the year-end was little changed at £1.1bn.
David Thomas, Barratt chief executive, said it had been a year of ‘fantastic progress’ with 'completions recovering to pre-pandemic levels and excellent productivity'.
For the current year, Barratt expects sales volumes to increase by 3%-5% to between 18,400 and 18,600 homes, with 55% currently forward sold though reservations have slipped recently, which it said reflected the growing uncertainty over the economy.
Rising building and materials costs are also being monitored closely.
“Macro-economic uncertainties remain, most notably around household energy costs and elevated inflationary pressures, changes in interest rates and the consequent impacts on employment, wage growth, house prices and consumer spending and confidence,” the company said.
"Our operating performance, forward order book and strong balance sheet position us well," it added.