12th Jan 2017 07:25
LONDON (Alliance News) - Barratt Developments PLC on Thursday said it expects a 7.0% year-on-year rise in its interim pretax profit as stronger demand outside London offset lower completion levels in the UK capital.
The FTSE 100-listed housebuilder said overall market conditions are healthy, with strong demand for new homes in the six months ended December 31. Barratt's sales rate rose slightly on the prior year, to 0.68 net private reservations per active outlet per week, from 0.66 net private reservations per active outlet per week.
However, Barratt said the number of completions recorded for the period declined to 7,180 units from 7,626 units a year earlier, despite completions outside the London region being "at the highest level for nine years".
The housebuilder said this decline was due to lower completions in London, which primarily was reflective of its planned build programme. In the six month period, completions in the London region came in at 367 compared to 842 the same period the year earlier.
Barratt's average selling price rose 3.9% year-on-year to GBP264,000 from GBP254,200, and its private average selling price increased to GBP296,000 from GBP281,100, benefiting from mix changes as well as some underlying house price inflation.
Barratt said it expects pretax profit for the recent six month period to be around GBP315.0 million, a 7.0% rise from the GBP295.0 million reported a year earlier. Total forward sales were up 16% on the prior year at GBP2.34 billion from GBP2.02 billion a year earlier, Barratt said.
Barratt said it continues to expect to deliver on its full-year volume guidance, of modest volume growth for its wholly owned completions and for 700 joint venture completions.
The group noted that the high-end London market presents "some headwinds" with regard to its gross margin target for financial year 2017, though it said it remains focused on delivery of a 20% gross margin for the year.
"This has been another good half year for the group. Consumer demand is strong benefiting from good mortgage availability and ongoing government support. Our healthy forward order book and this strong demand leaves us on track to deliver on our volume guidance for the full year," said CEO David Thomas.
By Hannah Boland; [email protected]; @Hannaheboland
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