Barratt is expecting full year pre-tax profits to be 158 per cent up on last year, it said this morning.
The house builder said it is set to make £110 million of profits for the year, with an operating margin of 9.5 per cent in the second half and 8.2 per cent for the full year - up from 6.6 per cent in the prior full year.
Giving a trading update for the year ended 30 June 2012, ahead of its annual results on 12 September, Barratt said net debt has almost halved to £170m. Group revenues rose by 14 per cent for the full year to £2.32bn, with total completions of 12,637 units.
Chief executive Mark Clare said: “This year has seen a rapidly improving performance across the group and shows that our strategy is delivering, with profits up more than 150 per cent and an almost halving of our net debt. We expect to make further good progress in the year ahead thanks to a strong forward order book, with private forward sales up 35 per cent and more higher return land coming into production.”
Total completions (excluding joint ventures) for the second half were 19.7 per cent up at 7,520 (H2 2010/11: 6,282). For the full year, total completions (excl jvs) were 12,637 (FY 2010/11: 11,078) with private completions of 9,832 (FY 2010/11: 8,444) and social housing completions of 2,805 (FY 2010/11: 2,634).
Barratt said it continues to focus on bringing new land into production as quickly as possible. For FY 2011/12 more than a third of completions were from more recently acquired higher margin land. This is expected to increase to more than half of completions in FY 2012/13 and around two thirds in FY 2013/14.
Barratt added: “Despite continued uncertainty surrounding the outlook for the wider UK market and constrained levels of mortgage finance, the industry has enjoyed a period of relative market stability. Looking ahead, we expect the government’s housing initiatives, in particular its mortgage indemnity scheme NewBuy, to continue to provide the industry with support.”
Social housing completions accounted for 22.8 per cent (H2 2010/11: 24.0%) of total completions (excluding joint ventures) in the second half and 22.2 per cent (FY 2010/11: 23.8 per cent) of total completions for the full year.
Total average selling price (excluding joint ventures) increased to £180,000 (FY 2010/11: £178.3k), with greater robustness in London and the South East.
Private average selling price increased by c. 1.6 per cent for the full year to c. £202k (FY 2010/11: £198.9k), reflecting overall stability in underlying prices and a small positive change in mix. Social average selling price declined to c. £106k (FY 2010/11: £112.3k) for the full year, primarily reflecting a lower social content in London.
Shared equity remained an important selling tool in the second half given the continuing constraints on mortgage finance. For the full year 20.5% (FY 2010/11: 22 per cent) of total completions were supported by shared equity and of this, two-thirds used Government schemes.