24th Feb 2016 11:16
LONDON (Alliance News) - Barratt Developments PLC on Wednesday said it would ramp up housing production, after its first half results to December showed a 40% surge in pretax profit which looks to be continued in the second half.
The FTSE 100 housebuilder posted pretax profit of GBP295.0 million, up from GBP210.2 million for the first half of its previous financial year, whilst revenue was pushed 19% higher in the half to GBP1.88 billion from GBP1.58 billion.
Barratt said the strong earnings came on the back of more completions at a higher average price. It sold a total of 7,626 homes in the six months to the end of December, up from 6,971 a year earlier, at an average selling price of GBP254,000, up 11% from the GBP229,200 average price in the first half of the prior financial year.
Barratt added the strong number of completions was a "significant step" towards balancing its business between delivery in the first and second of its financial year. The housebuilder usually delivers more completions in the second half, and 42% of last year's completions were made in the first six months.
This financial year the company is targeting 16,750 completions for the full year to June, compared to 16,447 in the previous financial year, which would make first half completions 45% of the total. It added it had started the second half strongly, with net private reservations per week of 260 at a rate of 0.71 net private reservations per active site per week, though the total per week was lower than the 279 registered in the comparable period a year earlier.
Barratt added it would be ramping up production of houses and, since December 2014 its land bank has grown to 52,007 plots from 50,444 plots. Barratt said it expected to approve 18,000 plots for purchase over the course of its financial year to June, adding it would tackle the rising build cost inflation through using off-site manufacturing.
Barratt said its total forward sales were up by 13% at GBP2.58 billion on February 21, and it now expects to have a net cash balance in excess of GBP250.0 million on June 30.
Barratt announced an interim dividend of 6.0 pence per share, up from 4.8 pence per share the previous year. It said that under its capital return plan it expects to return a total of 67.8 pence per share over the two-year period to November 2017.
"In line with our strategy, we have stepped up the number of completions in the first half and we did this in a disciplined way, both financially and operationally, without compromising on the quality of the homes we're building," said Chief Executive David Thomas.
"The market remains strong as a result of improved mortgage availability and Government support for first time buyers and we will continue to grow in a way that delivers for the needs of homebuyers and shareholders alike," Thomas added.
Barratt shares were up 0.8% at 566.50 pence on Wednesday.
By Hannah Boland; [email protected]; @Hannaheboland
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