BARRATT Developments, one of the UK’s largest house builders, said it would return to full-year profit despite market conditions remaining tough.
The firm predicted a full-year pre-tax profit of £40m before exceptional items, after a loss of £33m in 2010, meeting market expectations.
In its trading statement ahead of its annual results due September, the developer said its London business helped to boost profits. Tight lending conditions outside of the capital, however, were still slowing market recovery.
“Whilst we have seen some recovery following the difficult autumn selling season, trading conditions in some areas outside London and the South East remain challenging,” Mark Clare, group chief executive, said.
Barratt completed 11,171 houses in the year to June 2011, compared to 11,377 the previous year. For the second half, total completions were 6,339, near the 6,324 posted in the second half of 2010.
The firm also reduced its heavy debt burden to around £330m down from £367m in 2010. This was helped by improved profit margins up to 7.8 per cent from 5.9 per cent in 2010.
Clare said the government’s First Buy scheme – which helps first time buyers enter the property market – had also provided a “timely boost”.
Under the scheme, buyers will be offered a loan of up to 20 per cent of the value of the property, jointly funded by Barratt.
Last month, Barratt secured a £128m deal with London & Quadrant to build 375 new homes near Arsenal Football Club’s 60,000-seater Emirates stadium in north London.
Improved profits gave little comfort to investors as shares closed down 4.68 per cent to 105.9p.