Barratt predicts 40% rise in trading profit in first half
Published: 13 January, 2012
LONDON: Britain's biggest house builder delivered strong profit and turnover growth in the first half of the year.
Barratt said it expected operating profit to be up by around 40% at £61m, driven by a focus on costs and high margin land being built out.
The firm also saw total completions rise 7% to 5,198 units, helping turnover rise 8% to £950m in the first half of the year, according to a trading update.
Private completions grew most strongly, up 9% at 4,028 while social housing completions slipped to 1,089 homes.
A 4% rise in average selling price for private homes also helped to contribute to a rise in operating margin from 5% to a more respectable 6.4%, although still low for the sector.
Mark Clare, group chief executive said: "This has been yet another six months of good progress for our business despite the wider economic uncertainty.
Clare welcomed the Government's new housing strategy. He said: "The New Build Indemnity scheme is potentially the most important aspect, as it focuses on enabling customers to secure up to 95% loan to value mortgages which is significantly above current limits available for the new build sector.
"If the scheme is successfully implemented, it will substantially reduce the customer deposit required and be more cost efficient than shared equity products. Good progress is being made in its detailed implementation, which is likely to see first completions in the spring.
He also added that FirstBuy, the Government backed equity share product, would remain an important sales tool.
"We have made good progress in using our initial allocation of £24.9m (1,400 units) and this success has been recognised by the Homes and Communities Agency through an additional award of £7.0m (437 units)."
The new Government housing strategy was also expected to bring about a substantial release of surplus Government land for housing through the 'build now pay later' initiative.