Barratt hikes profit forecasts
BARRATT Developments yesterday said its full-year profits would come in above expectations as it continues to focus on maximising selling prices while keeping a lid on costs.
The UK’s third largest housebuilder has pencilled in an operating profit of at least £85m with margins rising to four per cent. The average selling price rose by 18 per cent during the half year and 11 per cent for the full-year to around £174,000 mainly due to changes in the mix of its properties.
Houses now represent 60 per cent of completions during the year compared to 46 per cent the previous year. However, it added that it has also seen an improvement in underlying selling prices. Total completions for the second half stood at 6,324, giving total completions for the year of 11,377 – down from 13,202 a year ago.
However, like rivals Taylor Wimpey, Persimmon and Bovis, the FTSE 250 company warned the outlook for the UK market remains challenging “as a result of continued constraints on the availability of mortgage finance and overall economic concerns”.
Barratt is targeting total completions for 2011 of between five per cent and 10 per cent ahead of 2010 due to an increase in the number of sales outlets rather than higher sales rates.
Net debt at the end of June stood at £375m – below previous guidance.
Chief executive Mark Clare said: “In the last six months we have driven a significant improvement in operating margin, delivered a profit for the group, and reduced debt levels by around £230m. This improved operating performance, combined with our success in agreeing terms on higher margin land means that the group is well positioned to secure further margin growth in what continues to be a challenging market.”