Barratt beats MMC housebuilding target

Barratt said today it had beaten a self-imposed target of 20% of its homes being built using MMC a year ahead of schedule.

The housebuilder, which today announced a record annual pre-tax profit of £910m on turnover of £4.8bn, said over the last three years it had built 5,274 homes using timber frame, with the majority of these in Scotland, while it was increasing its use across England and Wales, and it also used large format block and light gauge steel frame techniques.

“Our new target is to use MMC to build 25% of our homes by 2025,” the group added.

In June Barratt bought Oregon, the Selkirk-based timber frame specialist and one of the housebuilder’s principal suppliers of MMC materials.

“We are committed to increasing the number of homes we build using MMC to increase efficiency and to help mitigate the challenges posed by the shortage of skilled workers within the industry,” Barratt said.

As well as turnover for the year to the end of June of £4.8bn, down 2%, operating profit rose 4.5% to £901m, an operating margin of 19%. Total net cash at the end of the year stood at £766m.

Barratt completed a total of 17,856 homes over the course of the year, up 2%, with a 10% increase in affordable homes – 3,600. Average selling price dipped 5% to £274,000 due to mix changes and a move away from London activity.

The group said it continued to see some pressure on the supply of skilled labour and was looking to improve construction efficiencies and cutting demands on its labour force by introducing the new housetype ranges, “which are easier and quicker to build”, and through the use of MMC.

Cost inflation was 3% throughout the year, it said, and this was anticipated to rise to between 3% and 4% in 2019/20.

Mindful of the current Brexit situation Barratt said around 90% of its housebuilding materials were manufactured or assembled in the UK and it had fixed price agreements in place for all of these materials to December 2019, and 65% to June 2020.

Noting the UK’s impending exit from the EU Barratt said it recognised that the economic outlook would depend in the medium-term on the manner of the departure.

“We have a substantial net cash balance, a well-capitalised balance sheet, a healthy forward sales position, a continued focus on delivery of operational improvements across our business and an ongoing commitment to deliver high quality homes across the country,” it added.

Dave Sheridan, executive chairman of modular housebuilder Ilke Homes, said welcomed “traditional construction companies continuing to expand their housebuilding portfolio and further invest in the modern methods of construction.

Sheridan said the skills shortage and Brexit uncertainty was continuing to negatively impact housebuilding, and “diversifying the supply chain was a matter of urgency.

“The fact that one of the country’s biggest housebuilders is aiming to increase the number of homes built using MMC is proof that offsite manufacturing’s mass market moment is very much on the horizon,” he added.