Barratt Developments shedding 1,200 jobs

Thursday, 10 July 2008 12:00 AM

Builder Barratt Developments has confirmed it is to shed 1,200 jobs as the property market continues to deteriorate.

The company confirmed it is to close two divisions, along with merging a further eight into four - bringing the total number down to 26 from a total of 44 at the time of the acquisition of Wilson Bowden in 2007 - as a cost cutting measure.

Barratt's announcement follows that of Redrow and Bovis earlier this week, confirming the builders are to shed shed 40 per cent of their workforce.

The news was expected following a turbulent six months for developers.

Barratt confirmed average private sales in the second half of the year to June decline to 211 per week - 42.9 per cent below prior year.

Selling prices have been under pressure since September 2007, with more notable declines experienced since early April 2008, impacted by "restricted mortgage finance availability" and "declining consumer confidence", Barratt said in a trading statement.

However, the company remains upbeat.

Average selling prices increase by 1.4 per cent over the year, to £183,400, compared to £180,800 in 2007, largely due to a change in private and social property completions.

Barratt also delivered £33 million worth of cost savings from the integration of Wilson Bowden during the year to June, and is on track to deliver approximately £60 million in annualised savings during the next financial year.

"In terms of housing volumes, margins and debt, we have delivered a satisfactory performance in an intensely difficult market," said group chief executive, Mark Clare.

"By enhancing our sales capability, reducing our costs, and agreeing a new financial package, we have now substantially improved our competitive position and are better placed to deal with what will be a very challenging period ahead."

Barratt presently controls 78,700 plots of land, of which 86 per cent are owned and 14 per cent were agreed subject to contract. However, further land investments are limited to those forced by contractual obligation.

Net borrowings for the year were "lower than expectations", standing at £1.66 billion, a reduction of approximately £80m from December 31st 2007. The debt is largely a result of the acquisition of Wilson Bowden.

As a result no dividend will be paid to shareholders for this financial year.

Following the news shares in Barratt rose 11.5 per cent, to 60.5 pence. However, this is still well below the year peak of 1,002 pence a share.

Chris O'Toole

Tags:
• uk property news