Profits at Barratt surge as Berkeley judges itself to be in 'excellent shape'

Profits at Barratt Developments, the UK’s biggest housebuilder, jumped by more than 12pc in the last year as the company was boosted by rising house prices.
It came as Berkeley said it was in "excellent shape", reaffirming its target of producing ?3bn of pre-tax profit by 2021 partly due to its strong forward order book.
Barratt said its average selling price in the year to June 30 increased by 6pc to ?275,200 from the previous year.
The FTSE 100 company said pre-tax profits for the year were ?765m, up 12.1pc from ?682m last year. Revenues, meanwhile, rose 9.8pc to ?4.7bn.
In total, Barratt’s housebuilding volumes came in at 17,395, its highest level in nine years but only 0.4pc ahead of the previous year. It added that there would be “modest” growth in completions this year, of about 1-2pc.
Barratt Developments
David Thomas, the chief executive, said that growth would increase as the company opened more sites over the next year. He added: "We have grown volumes by 55pc over the last six years. For any business to grow at a compound of around 8pc per annum over six years, that’s good by any measure."
Barratt's forward order book its up 14pc on last year, and Mr Thomas said that "gives us a lot of confidence for the next full year".
Barratt also announced a 39pc increase in its final dividend to 17.1p. It said it achieved its financial target of hitting 20pc gross profit margin and 25pc return on capital spent.
Analysts at Cannacord Genuity said that "the company's recent sales rate is flat at healthy levels rather than showing an increase". Anthony Codling at Jefferies added: "We expect it to increase housebuilding volumes in the current year and there is potential for operational efficiency rather than Help to Buy led operating margin gains in the future.
"The results are short on excitement, but strong on delivery."
Despite the rise in profits, Barratt shares fell more than 4pc in early trading. Spreadex analyst Connor Campbell said the dip is a correction following the company's recent share price spike. Barratt shares are up 29pc since the start of the calendar year, and Mr Thomas added: "We have to look at it in the round - we have seen good momentum."
Profits at Barratt surge as Berkeley judges itself to be in 'excellent shape'

A Berkeley development in Woodberry Down, north London

John Nguyen/JNVisuals
Berkeley said that its profits this year would be as least as strong as last year's, despite headwinds in the central London property market.
The company said: "While Berkeley is in excellent shape, the London market continues to be adversely impacted by both uncertainty around the terms and implications of Brexit and  the changes in recent years to stamp duty and mortgage interest deductibility." It added that low interest rates and currency tailwinds were helping mitigate those problems for the company, which builds 10pc of London's new homes.
"Activity in London is better than it was a year ago, but worse than it was two to three years ago. Prices have softened but not as much as feared," said Clyde Lewis at Peel Hunt. "In our view, the five-year profit guidance continues to look conservative."
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