Barratt has revealed a strong start to 2012 and confirmed a 40 per cent hike in operating profit in the six months to December.
Posting interim results for the six months to 31 December 2011, the house builder said weekly private sales were up 21.8 per cent to 246 (from 202 last time) in the seven weeks to 19 February.
In line with the firm’s trading update last month, the company saw a 40 per cent hike in operating profit in the six months to 31 December 2011, from £43.5m in 2010 period to £61.1m this time, with revenues up 8.6 per cent to £952.8m (2010: £877.6m). Net debt is lower than expected at £542.2m (compared with £537.0m).
Pre tax profit was £21.6m, compared with a £4.6m loss in the 2010 period. Newly purchased, higher margin land, which the firm says is driving profits, made up a third of the sales, and is expected to climb to a half by 2013 and two thirds in 2014. Average selling price increased by 3.1 per cent to £181,200 (2010: £175,800).
Chief executive Mark Clare expects continued margin growth, but suggested it is still too early to it call a stable market.
Mr Clare said the country is still producing less than half the numbers it needs, with latest figures showing production is at about 100,000 per year, while demand is nearer 250,000. He suggested the “gap is getting bigger and bigger”.
Mortgage availability remains a central challenge, but he said government-backed shared equity scheme FirstBuy had been an “important sales tool”.
He welcomed the NewBuy scheme as”the most important aspect” of the government’s November housing strategy. The government mortgage indemnity scheme will guarantee 95 per cent loans up to £500,000 coming next month.
Mr Clare said the firm is seeing 1,000 registrations per week from customers interested in the model. In the half year, 972 (2010: 1,342) completions used shared equity. Of these, 545 used the government FirstBuy or HomeBuy schemes.
The firm had talked about selling its £177m shared equity portfolio last summer, though plans were halted in November. It said today there is no update on that front.
Latest share price today showed a rise of 3.5 per cent to 134 pence.