Barratt sees swing back into profits
BARRATT Developments swung back into profit in the first half of the year thanks to its increased focus on higher margin regions, building houses rather than flats and developing low-cost land bought after the 2008 property crash.
Shares, which are up almost 50 per cent since Christmas, rose almost eight per cent yesterday after the company said it made a pre-tax profit of £21.6m for the six months to December compared with a loss of £4.6m for the same period last year.
The average selling price increased 3.1 per cent to £181,200, helped to boost its operating margin to 6.4 per cent from five per cent a year ago.
Housebuilders have been widening their operating margins by focusing on houses and building on cheaper land purchased since the downturn.
Barratt has bought more than 22,000 plots of land since 2009, and expects to purchase around 8,000 plots in 2012, it said in a statement.
Chief executive Mark Clare the firm was upbeat in its outlook for the second half as housebuilders move into the key spring selling season, particularly with a new government-backed mortgage indemnity scheme to help first-time buyers, which is due to be introduced mid-March.
The company has received around 1,000 registrations a week for the new programme, designed to help first-time buyers get on the property ladder, which Clare said presents “a major opportunity for the industry”.
Rival housebuilder Galliford Try also posted strong results yesterday and doubled its dividend after reporting an 89 per cent rise in half-year profits to £32.2m.
The firm, mainly focused on the south east, said it built a record 1,352 homes in the period, up 50 per cent.