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LONDON -(Dow Jones)- U.K. house builder Barratt Developments PLC (LSE:BDEV) (BDEV.LN) Wednesday issued a statement confirming its full-year guidance, but the move failed sway investors and reverse another big drop in its share price.
At 1453 GMT, Barratt's shares traded down 33 pence, or 35.8%, at 59 pence. It is down more than 50% this week and has lost more than 94% of its value in the past 12 months.
The stocks of the U.K.'s biggest house builders continued to crumble after a pessimistic report titled "Uncertainty Remains: Be Afraid" from Merrill Lynch, which examined the risk of write-downs and capital-raising exercises.
For a second day straight, Barratt Developments (LSE:BDEV) and Taylor Wimpey PLC (LSE:TW) (TW.LN) saw one-fifth or more of their market value erased as the stocks of house builders again were among the biggest losers in the FTSE 100 and FTSE 250 indexes.
Barratt Developments (LSE:BDEV) said it remains comfortable with market consensus forecasts for the year of 18,300 completions and profit before tax and exceptional charges of GBP395 million.
The company said it continues to operate within its GBP2.6 billion of committed facilities and its banking covenants. "Given anticipated completion numbers, net debt at the end of June is expected to be approximately GBP1.7 billion, in line with previous guidance," it said.
But the entire sector appears to be in near freefall. Taylor Wimpey's shares traded down 19 pence, or 29.6%, at 46 pence. That's down by more than one-third this week and off more than 85% in the past year.
Merrill downgraded Barratt, Bellway PLC (LSE:BWY) (BWY.LN), Berkeley Group Holdings PLC (LSE:BKG) (BKG.LN), Galliford Try PLC (LSE:GFRD) (GFRD.LN) and Redrow PLC (LSE:RDW) (RDW.LN) from neutral to underperform and Persimmon PLC (LSE:PSN) (PSN.LN) from buy to neutral.
It maintained underperform ratings for Taylor Wimpey, Bovis Homes Group PLC (LSE:BVS) ( BVS.LN) and Kier Group PLC (LSE:KIE) (KIE.LN).
"We can demonstrate that a 20% or more fall in house prices in a 12-month period has the potential to eliminate all of a house builders' net asset base," Merrill said in its report. "Moreover, the early 1990s precedent would suggest that one write-down will be insufficient - and groups needed two or even three sets of write-downs before net asset value stabilized."
Persimmon's stock traded down 9 pence, or 2.4%, at 378 pence and Wednesday is expected to lose its place in the prestigious FTSE 100 in an index recalculation.
Bellway (LSE:BWY) traded down 105 pence, or 20.8%, at 401 pence; Berkeley was down 18 pence, or 2.4%, at 747 pence; Galliford Try (LSE:GFRD) was down a penny, or 3.9%, at 31 pence; Redrow (LSE:RDW) traded down 45 pence, or 27.5%, at 120 pence; Bovis traded down 12 pence, or 3.6%, at 331 pence; and Kier Group traded down 42 pence, or 4.1%, at 980 pence.
-By Jonathan Buck, Dow Jones Newswires; +44 (0)207 842 9237; jonathan.buck@ dowjones.com
(END) Dow Jones Newswires 06-11-08 1135 Copyright (c) 2008 Dow Jones & Company, Inc.
