Barratt profits double on sales at six-year high

Barratt now has net cash of around £70m after having a net debt of £25.9m in 2013
Barratt Developments, the biggest housebuilder by volume in the UK, yesterday announced it expected annual pre-tax profits to double to around £390m, buoyed by higher demand from a strong property market.

The earnings figures would be record-breaking for Barratt, beating analyst forecasts and up from £192m in 2013. The forecast comes as the group saw house sales reach their highest level in six years.

Barratt sold 14,838 homes in the year to the end of June, up 8.6 per cent from 2013, as the average sale price rose 13 per cent to £220,000, up from £194,800 in 2013.

The firm credited this rise to a shift towards larger properties in its sale pipeline, as well as surging house values across vast areas of the UK.

Strong demand for housing has pushed up profits at several property firms in recent weeks, including Bovis, Taylor Wimpey and Berkeley.

Mark Clare, group chief executive, said; “The market remains positive with strong demand for new homes across the country. The land we have acquired in the last five years together with our disciplined operating model is delivering a very strong business performance.”

As a result of rising prices the group said return on capital exceeded its 18 per cent target in the 2014 financial year, two years ahead of schedule.

Panmure Gordon analyst Rachael Applegate said in a note that this was a strong update, with the group demonstrating it was in robust shape, both financially and operationally.

Barratt, whose forward sales are up 47.7 per cent to £1.2bn, said it has a positive outlook for the 2015 financial year and expects to make good progress towards its 2016 financial year target of 16,000 total sales.

GALLIFORD Try, the London-listed house-building and construction group, yesterday announced it had bought Miller Construction for £16.6m, a day after it announced it expected record pre-tax profits for the year to the end of June. Jeff Davies, analyst at HSBC, said in a note the acquisition should double the group order book to £2.8bn.

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