Barratt Developments posted profit before tax of more than £520m as the company suggested that its outlook for the year was improving, despite sales at the beginning of 2023 lagging behind last year.
The housebuilder’s revenue increased 24 per cent in the six months to December 31 from the same period last year while its pretax profit rose 16 per cent.
It completed around 600 more houses in the period than it did last year, a 6.9 per cent increase, with its adjusted profit before tax up 15.9 per cent at £521.5m and reported profit before tax also advancing 15.9 per cent to £501.5m.
However, the number of homes reserved by buyers was 44 per cent lower than the last year, with it falling throughout the period due to “political and economic uncertainty”.
What does this mean for the market?
CEO David Thomas said: “The economic backdrop has clearly been challenging and consumer confidence weakened significantly during the half, which meant we saw lower reservation rates for future sales – particularly in the second quarter.
“Whilst we have seen some early signs of improvement in current trading during January, we will need to see continued momentum over the coming months before we can be confident that these challenging trading conditions are easing,” Thomas continued.
The company said it has seen a “reasonable start” to the new year with 182 net reservations per week. In 2022, however, this figure was 292.
At 29 January this year, there were nearly 5,000 fewer forward sales than at 30 January last year.
The company said its outlook for 2023 was dependent on the spring selling season. It expects to complete between 16,500 and 17,000 homes in the 2023 financial year if the reservation rate at the start of this year continues to improve.
Charlie Huggins, Head of Equities at Wealth Club, commented: “Barratt has seen early signs of improved trading in January but it’s still too early to say whether the housing market will suffer a mild downturn or a much deeper fall out, accompanied by substantial house price declines.
“At least things are looking brighter than a few months ago, which is why Barratt’s share price has recovered significantly from its lows,” he concluded.