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Barratt Homes to slash 1,200 jobs

Barratt Homes has confirmed it will be slashing 1,200 jobs as the housing market downturn hits yet another building firm.

In a trading statement released today, the firm says it will be closing two divisions and merging a further eight divisions into four.

This will bring the total number down to 26 from a total of 44 at the time of the acquisition of Wilson Bowden.

It has signed a new three year £400m facility and has reached an agreement to extend its existing £400m revolving credit facility to July 2011.

In its trading for the year ended 30 June 2008, the firm says on a like for like basis, total completions decreased by 13.8 per cent, with a second half performance of 9,532, 12.9 per cent down on the prior year.

Private completions were 18.4 per cent lower, with social housing completions up by 10.1 per cent. Social housing represented 20.4 per cent of total completions in the period.

Average private sales rates in the second half, at 211 per week, were 42.9 per cent below the prior year, and 13.5 per cent below the first half.

Barratt says that despite the substantial reduction in sales, visitor rates per site per week were down only 14.8 per cent in the second half on prior year and up 15 per cent on the first half, reflecting underlying consumer demand.

It says this mismatch between visitor levels and sales, and the level of cancellation rates, which rose to 33.6 per cent for the full year, reflects the acute shortage of mortgage finance.

Barratt says it is now only investing in new land to the extent that it was contractually committed to do so. Contractually committed land spend in the 2008/09 financial year will be significantly lower at around £600m.

Group chief executive Mark Clare says: “In terms of housing volumes, margins and debt, we have delivered a satisfactory performance in an intensely difficult market. 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.”

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