Barratt books big rise in annual profits
The housebuilder hailed an ‘outstanding’ year and said market conditions remain good.
Housebuilder Barratt Developments has posted a hefty rise in annual profits as it hailed an “outstanding” year.
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The group posted 9.2% rise in annual pre-tax profit to a record £835.5 million, while revenue increased 4.8% to £4.87 billion.
Completions were up 1.1% to 17,579 – the highest number in a decade – and the average selling price on completion increased 5% to £288,900.
Barratt said market conditions remain good and the availability of attractive mortgage finance and the Government’s Help to Buy scheme continue to support “robust consumer demand”.
Chief executive David Thomas said: “The group has had another outstanding year delivering a strong operational and financial performance, and our highest volumes in a decade.
“As the UK’s largest housebuilder, we are helping to address the country’s housing shortage – creating jobs and supporting economic growth whilst continuing to lead the industry in quality and customer service.”
The positive comments come despite reports surfacing over the weekend that Help to Buy will be scrapped in 2021, as well as warnings from rival firms over Brexit.
The group starts the new financial year in a good position with a strong balance sheet, healthy forward sales and robust consumer demand supported by a positive mortgage environment David Thomas, Barratt CEO
Barratt also announced new medium-term operational targets, including volume growth of 3% to 5% per year and a minimum 25% return on capital employed.
Forward sales are up 11.1% at £3 billion.
Mr Thomas added: “The group starts the new financial year in a good position with a strong balance sheet, healthy forward sales and robust consumer demand supported by a positive mortgage environment.”
Shares were up 0.5% in morning trade.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said that while the results were positive, worries about the housing market persist.
“The market is worried about three things which are out of Barratt’s control – Brexit, interest rates and Help to Buy.
“There are concerns that withdrawal from the EU may not be an entirely smooth ride, and that puts a dampener on stocks like Barratt, which are plugged into the domestic economy.
“The Bank of England is raising interest rates, albeit slowly, but that’s a reversal of direction from the last ten years of monetary policy.
“Finally, the end of the Help to Buy scheme is hoving into view, and unless the government extends this in some form beyond 2021, that spells the removal of a key lynchpin in the new build property market.”