And relax. It has been a nail-biting few months for the nation’s homeowners. May brought the biggest month-on-month drop in house prices since February 2009, so Nationwide data showed, and June was almost as bad. Come August and all is forgotten. Prices are at a new all-time high. They rose last month at their fastest pace in 16 years. 

Enjoy the calm — and the stamp duty holiday — while it lasts. Housebuilder Barratt Developments certainly is. On Wednesday boss David Thomas was the latest in the sector to strike an upbeat tone as the group revealed full-year results. 

Numbers for the year to June did not give much cause for cheer, with pre-tax profits down almost 50 per cent and completions down 30 per cent. But given the circumstances, figures for the new financial year look much more promising: up to 15,000 completions for the year ahead and about that number of forward sales already in the order book. 

True, that is well below the roughly 18,000 Barratt planned to complete in the 12 months to June 2020 before lockdown shut the housing market and slowed construction. But it is still decidedly better than the 12,000 the company ultimately managed.

More striking is Barratt’s reiteration of its commitment to 20,000 completions a year “over the medium term”. After the financial crisis, Barratt kept trimming completions for years. Not until 2012 did it start to increase volumes again. Boris Johnson may want groups to “build, build, build”, the slogan for his planning reform. But Barratt could be forgiven for wanting to “wait, wait, wait” and see instead. 

Turbulence will almost certainly return to the housing market, when the stamp duty holiday ends and the Help to Buy scheme starts tapering off after March. There are reasons to think Barratt should prosper nonetheless. The housing shortfall endures. Help to Buy does not end entirely until 2023, providing a prop in the meantime. For the 16 per cent of Barratt’s buyers who used the scheme last year but will not be eligible after March — including existing homeowners — part exchanges should soften the impact. Through the stamp duty holiday and planning proposals, the government has shown its willingness to continue supporting the sector. 

Look to Barratt’s dividend, though, for the real confidence gauge. Rival Persimmon has reinstated its payout, at a reduced level. Barratt has held off so far. Reinstating that, not the latest house price figures, will be the sign its investors can celebrate. 

Pendragon plans to motor away

Lombard would like a flash new sports car — a Porsche would do at a push. Bill Berman, chief executive of car dealer Pendragon, already has forecourts full of fancy motors under the Evans Halshaw and Stratstone brands. What he wants is underlying pre-tax profits of between £85m and £90m by 2025. 

At first glance, the two desires seem equally improbable. At the top end, Mr Berman’s target is almost 20 per cent above Pendragon’s previous peak in 2016. It is roughly twice as good as performance in 2018, the year before Pendragon went off the rails

On closer inspection, though, Mr Berman’s wish is not entirely implausible (unlike Lombard’s). The steps he proposes to turn round the dealer are sensible, even. They rely on improving margins, not ramping up volumes — logical, since a surplus of stock helped push Pendragon to a loss last year. 

As permanent boss since February, Mr Berman has already embarked on a cost-cutting plan in Pendragon’s UK franchise dealerships, shutting sites and slimming sales teams to improve efficiency. Plans to improve online sales and make better use of back-office tech are equally rational. So is sorting out Pendragon’s standalone used car business. 

Easy to say, less easy to do, though. There will be plenty of competition to Mr Berman’s digital ambitions. He is far from the first to talk up “disrupting” the fragmented used car market: start-up Cazoo secured itself a $1bn valuation in June with a similar pitch. And while some of Pendragon’s problems can be chalked up to previous management errors, there are significant structural challenges facing the industry as well. 

Pendragon’s investors should take heart that Mr Berman is making the right moves to reverse years of share price decline. Just don’t get too carried away yet. 

Dumbbells at the ready

Britons were a sedentary bunch in lockdown, settling in for six-and-a-half hours a day of video viewing. But results from the Gym Group on Wednesday suggest all is not lost for the nation’s fitness. Though a quarter of the low-cost group’s members quit between March and the time gyms reopened in July, the number of new joiners in the five weeks since is up 30 per cent year-on-year. Visits per member have returned to last year’s levels. January, not August, is usually the month for gym-joining, though. Gym Group has to hope Brits’ exercise enthusiasm is more enduring than the usual New Year’s bump. 

cat.rutterpooley@ft.com

Article Source

Leave a Reply

Your email address will not be published.