April 15 (Reuters) - Britain's largest homebuilder Barratt Redrow reaffirmed its full-year profit and home completion forecasts on Wednesday, but warned of limited visibility beyond the current fiscal
UK's Barratt Redrow warns of cost pressures as it slashes land targets, cuts spending
Barratt Redrow's Strategic Response to Market Challenges
April 15 (Reuters) - Britain's largest homebuilder Barratt Redrow on Wednesday slashed its land spending and approval targets, saying costs may rise in the next fiscal year due to higher energy prices stemming from the Middle East conflict.
Land Spending and Approval Targets Reduced
The group had already trimmed land approvals - meaning it would seek building approval for fewer plots - in February, and is now further scaling back it back by 25%-30%, citing fewer attractive opportunities and current market conditions.
Resilient Demand Amid Market Uncertainty
However, it said demand remained resilient, with its net private reservation rate - a measure of how many new homes a housebuilder is selling or leasing - including bulk rental deals rising 6.3% in the 13 weeks to March 29, helping lift shares nearly 3%.
Risks and Warnings Across the Housebuilding Sector
Sector-wide Defensive Stance
RISKS FLAGGED ACROSS HOUSEBUILDING SECTOR
The defensive stance follows warnings from across the sector, including from Berkeley, which has signalled slower profit growth and paused land buying.
Competitor Concerns
Rivals Taylor Wimpey and Bellway have flagged risks from higher building costs and interest rate uncertainty squeezing affordability for buyers.
Cost Inflation and Energy Price Impact
Barratt Redrow maintained its guidance for 2% build cost inflation overall for fiscal 2026, but warned that higher energy costs are likely to be reflected in increased building material costs in the year from July 2026 to June 2027.
The sector is bracing for higher oil and energy prices, which could drive up costs for energy‑intensive materials such as bricks and plasterboard, prompting builders to plan for alternative supply options.
Financial Outlook and Analyst Perspectives
Land Spend Reduction Strategy
CUTTING LAND SPEND A WISE CALL
RBC analyst Anthony Codling said the move to limit land buying is a wise call, noting that "Barratt is doing all that it can".
The company said it now expects to approve between 7,000 and 9,000 plots this financial year and cut its land spending estimate to 700 million-800 million pounds ($949.6 million to $1.09 billion) as it becomes "even more selective" in an uncertain environment.
Profit Guidance and Future Outlook
Barratt Redrow reaffirmed its profit and home completion forecasts for the year through June and now expects net cash ahead of previous guidance due to delayed building remediation payments and reduced investment.
However, outgoing CEO David Thomas warned of limited visibility beyond the current financial year amid rising geopolitical tensions.
Additional Information
($1 = 0.7372 pounds)
(Reporting by Raechel Thankam Job in Bengaluru; Editing by Subhranshu Sahu and Jan Harvey)
