Wednesday preview: Barratt Developments reports first half

Barratt Developments is expected to report solid revenue growth for the first half as the property developer benefits from soaring house prices.

The group has already indicated in a trading statement, released in January, that is has achieved a 10.8% increase in the average selling price and a 9.4% rise in total completions for the six months ended 31 December 2015.

Chief executive David Thomas said he remained confident in his outlook for the full year as the group continued to invest in new developments.

Numis said it expects a first half revenue increase of 20% and strong margin growth, issuing an ‘add’ rating for the stock.

“This strong performance partly reflects that the group is looking to rebalance the completions mix to a more even H1/H2 profile and therefore we would expect a lower rate of revenue growth for the full year (+6.3%),” said analyst Chris Millington.

“In our view Barratt currently looks the most attractive housebuilder delivering over 10,000 units per year and we think its ability to drive fast capital turn will drive strong growth in ROCE from here.”

The interims come as housebuilders have warned of the risks to the sector should the UK vote in favour of leaving the European Union at the referendum on 23 June. Companies within the housing industry are worried that the so-called Brexit could lead to a shortage of skilled construction labour, constrain investment in new house building work and so further worsen the country's housing shortage.

“Whilst the industry is recruiting heavily and training thousands of young people it does currently rely on skilled labour from abroad," the Home Builders Federation told Inside Housing.

Any comments from Barratt’s CEO on Brexit will be duly noted.

Investors are also likely to compare its results to sector peer Persimmon which reported a 34% increase in full year underlying profit before tax to £637m, as revenues rose 13% to £2.9bn, driven by a gain in the average selling price and a jump in legal completions.

Wednesday 24 February

INTERIMS
Barratt Developments, Hays, Ibex Global Solutions, Mcbride, Town Centre Securities, Tristel, Tristel, Wilmington

QUARTERLY PAYMENT DATE
Merchants Trust

QUARTERLY EX-DIVIDEND DATE
Brunner Inv Trust

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Crude Oil Inventories (US) (15:30)
MBA Mortgage Applications (US) (12:00)
New Homes Sales (US) (15:00)

GMS
Liontrust Asset Management, Liontrust Asset Management

FINALS
Capital & Counties Properties , Harworth Group, International Personal Finance, Interserve, Man Group, New World Resources A Shares, Petrofac Ltd., Rathbone Brothers, Rentokil Initial, STV Group, Synectics, Weir Group, Weir Group

AGMS
Blackrock Income And Growth Investment Trust, Gooch & Housego