Barratt doubles profit as home completions fall

Aaron Morby 10 years ago
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Britain’s biggest house builder more than doubled half-year profits to around £45m despite only completing 5,085 homes, marginally down on last year.

Barratt said it had started the year with a strong private forward order book, up a third on the same time last year.

It added that with higher margin land being built out it expected to raise profits for the full year assuming the market remained stable.

Mark Clare, group chief executive, said: “This has been a good first half performance. Pre-tax profit has more than doubled, net debt was significantly lower than the prior year, and we have started the second half with a strong private forward order book up by over 35%.

Clare, who yesterday was named as one of 18 figures tasked with drawing up an industrial strategy for construction, added: “In addition, we have been investing for the future, successfully securing higher margin land both in the South-East and across the rest of the country that will drive further profit growth.”

The fall in housing output will come as a blow to the Government which has introduced several measures to stimulate housing demand and supply.

In a pre-end of year trading statement, Barratt said private completions were actually up 5% on the prior year to 4,241, but its social housing completions fell 20% to 844.

Operating margin is expected to increase to 8.4%, up from 6.4% in the prior year.

Barratt revealed nearly 8% of private reservation in England had be supported by the Government’s NewBuy mortgage indemnity scheme.

Around 17% of its completions were also supported by shared equity, of which three quarters were Government-backed schemes.

Barratt said it also expected to receive £34m in low-cost development loans in 2013 from the Government’s Get Britain Building Scheme, which is designed to kickstart developments.

The group said it had made good progress in transforming its landbank in the period by utilising historic, lower margin land while bringing more recently acquired, higher margin land into production as quickly as possible.

Barratt said there had also been a significant increase in approvals to acquire higher margin land with £453m of land acquisitions approved in the six months equating to 9,320 plots on 67 sites

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