Barratt Developments set to beat market forecasts
Housebuilder Barratt Developments has said that it expects annual profit to beat market forecasts after it delivered a record number of home completions and improved margins.
In a trading update for the year ended June 30, the company said pre-tax profit would be around £910 million, up from £835.5m the previous year and ahead of market analysts’ predictions of £884m.
Barratt completed the construction of 7,856 new homes completed (2018: 17,579 homes). That included 17,111 of wholly-owned completions, up 2.6% on the previous year, and joint venture completions of 745, down 17.1%.
Issued ahead of publication of Barratt’s annual results in early September, the update added that operating margin rose to 18.9% in the year from 17.7% in 2018, supported by the decision to buy sites with higher margins and refinements to new housing ranges.
Looking ahead the company said it remains focused on further margin improvements and delivering its medium-term targets of volume growth of 3-5%, land acquisition at a minimum 23% gross margin and a minimum 25% return on capital employed.
“Whilst there remains some economic and political uncertainty, the group is in a strong position,” Barratt said.
“We have a substantial net cash balance, a well-capitalised balance sheet, a healthy forward sales position, a continued focus on delivery of operational improvements across our business and an ongoing commitment to deliver the highest quality homes across the country.
“We believe that this gives us the resilience and flexibility to react to potential changes in the operating environment in fiscal year 2020 and beyond.”
Chief executive David Thomas said: “It has been another very good year for the group both operationally and financially. We have delivered our highest number of completions for eleven years, made further improvements to our margin and as the only major housebuilder to be awarded a 5-Star rating for customer satisfaction for 10 years in a row, we continue to lead the industry in quality and customer service.
“We begin the new financial year with a strong forward order book and cash position, continued focus on the delivery of operational improvements across our business, and an ongoing commitment to deliver the highest quality homes across the country.”