Barratt Developments PLC (LON:BDEV) and Vistry Group PLC (LON:VTY) joined their rival housebuilders in shutting down building sites and cancelling or suspending their next dividend payments to conserve cash as the coronavirus lockdown hits production and demand.
FTSE 100-listed Barratt said directors believe it is “appropriate” to scrap the proposed 9.8p per share interim dividend that was due to be paid in May, given the uncertainties caused by the impact of coronavirus. This will mean around £100mln would be kept on the balance sheet.
“The board recognises the importance of dividends as a part of overall shareholder returns and will consider dividends at the time of announcing the full year results in September taking into account the position on COVID-19,” Barratt said.
Barratt, like its peers, said it building sites are now closing due to the government’s new social distancing initiatives, which it expects to have a “significant impact on both construction output and reservations”.
Likewise, Vistry said it was also postponing the interim dividend payment of 41p per share that would have been payable on 29 May, saying it “feels that it is not appropriate to continue with this payment at this time”. This payment would have cost around £60mln.
Vistry said it has committed banking facilities totalling £750mln with “well spread” maturities out to 2027, with cash of £90mln and a further £225m of undrawn facilities available.
At Barratt, there was £380mln of cash and equivalents in the bank last Friday, plus a £700m undrawn borrowing facility and fully drawn £200mln US private placement notes.
Bellway PLC (LON:BWY) also said it was putting its next payment on pause, noting the government’s measures to prevent the movement of people to limit the spread of the epidemic created “a significant risk to production capability and customer demand in the weeks and months ahead”, with reservation rates already weakening in the last two weeks.
Earlier in the week, Redrow plc (LON:RDW) scrapped its interim dividend, saving £37mln, and put new land purchases on hold, and Taylor Wimpey PLC (LON:TW.) reversed its decision to propose a final dividend of 3.8p per share and a planned special dividend payment of 10.99p per share at its upcoming AGM, saving a combined £485mln.
“Until the extent and duration of the disruption is better understood, the board believes conserving cash is in the best interests of the long term sustainability of the business,” Taylor Wimpey said, with the ordinary dividend “stress tested… in a ‘normal’ downturn, the global COVID-19 pandemic goes beyond normal and even severe cyclical swings and represents an exceptional case”.
Boris Johnson imposed the restrictions on British people’s movement on Monday night, which not only will curtail building output due to labour and material shortages, while planning permission is also expected to be delayed as committee meetings are postponed.