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Barratt Development aims for 20% gross margin as sales rise

Barratt Developments has said it is “on track” to meet its target of 20 per cent gross margin by 2017 after posting a boost in sales.

In a trading update to the City, the firm said total forward sales including joint ventures had grown by 20.7 per cent between July and November this year compared with the same period the year before.

Total forward sales now amount to £2.49bn, up from £2.07bn a year earlier.

The company said it was on track to deliver gross margins of 20 per cent by 2017.

The firm launched 49 new developments in the period, down from 80 a year earlier, and it is now operating from 380 active sites.

Barratt said it expected “controlled” growth in site numbers during 2016, due to a “faster than expected” rate of sales, and forecast a 3-4 per cent increase in build costs in the same year.

Sales of affordable homes grew by 35 per cent in the period compared with a year earlier, while private sales grew by 20.6 per cent.

Between July and November, Barratt purchased £255.8m of land, equating to 36 sites, down from £312.7m of land the same period the year before.

The company will buy between 16,000 and 18,000 plots in 2016.

The firm said it continued to see pressure on skilled labour supply for the period.

The firm has employed 327 new graduates, trainees and apprentices during 2015 and has recruited another 250 for 2016.

In its latest full-year results, covering the year to June 2015, the company posted a 44.8 per cent surge in profit, while revenue increased by 19.1 per cent to hit £3.76bn.

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