A red hot UK housing market drove profits at housebuilder Barratt Developments up sharply over the last year, according to fresh results published today.
The housebuilder posted a 65.1 per cent surge in pre-tax profits for the year-ended 30 June, reaching £812.2m, up from £491.8m in the previous year.
Despite the recovery in net earnings for the London listed company, profits are still 10 per cent below their pre-Covid accounting period.
David Thomas, chief executive of Barratt Developments, said: “We have made excellent progress this year thanks to the resilience, flexibility and hard work of our employees, sub-contractors and suppliers, who have also continued to deliver the highest standards of quality and service.”
Total revenue was up one per cent on 2019 levels, reaching £4.81bn in 2021, compared to £4.76bn two years ago.
Income slumped last year, the period worst affected by the Covid crisis, to £3.41bn.
A surge in demand in the housing market over much of the last year, triggered by the introduction of the stamp duty holiday in July 2020, has provided a windfall for many of the UK’s largest housebuilders.
Barratt intends to build between 17,000 and 17,250 homes in the next year.
Latest data from Nationwide shows house prices are 11 per cent higher than they were a year ago.
“There is very strong demand for houses across the country and we play a crucial role in providing the high quality and sustainable homes this country needs,” Thomas added.
Nicholas Hyett, Equity Analyst at Hargreaves Lansdown said of the update: “All the signs in Barratt’s results are that the housing market remains robust.
“Average selling prices are climbing again, more than offsetting a four to five per cent increase in build costs, while forward sales are some 20.4 per cent ahead of pre-pandemic levels. With coronavirus related costs fading into the background underlying profits are growing once again.
“Despite the progress the market seems disappointed with the results, and we suspect that’s down to limited detail about additional shareholder returns. The group exited the last financial year with over £1.3bn in net cash. A good portion of that is earmarked for helping the group reach 20,000 completions a year, but with land purchases already approaching that level that still leaves some surplus,” he added.
The company’s share plunged in afternoon trading, down 4.50 per cent to 709.40p.