Wednesday preview: Barratt Developments to report strong second half

Housebuilder Barratt Developments is expected to report strong demand in the second half in a trading update on Wednesday.

“We expect Barratt to report that demand was strong in its second half and that it is in-line/above consensus expectations for the full year,” said Numis analyst Chris Millington.

“We think that net cash on the balance sheet will be strong (probably >£350m), although this does disguise that average net debt is around £200m and land creditors stand at around £1bn.”

The company is likely to comment on how Brexit may impact the business. Numis thinks remarks will be consistent with what other housebuilders have been saying – that trading is broadly in line with last year, although it is too early to tell the impact of Brexit.

“Whilst we think that Barratt is materially better placed to withstand a downturn than it was in 2007, it still has one of the most leveraged balance sheets and less downside protection in its margins.

“On this basis we think that there are better placed housebuilders, which also trade at a discount.”

In economic data, China trade figures will be released ahead of the opening bell in the UK.

Meanwhile, the Bank of England publishes its Credit Conditions and Bank Liabilities Surveys after saying it would reduce the UK countercyclical capital buffer rate from 0.5% to 0% of banks’ UK exposures. It comes ahead of the BoE’s policy decision on Thursday, with many analysts expecting an interest rate cut.

Wednesday 06 July

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (US) (13:30)
Factory Orders (GER) (07:00)
ISM Non-Manufacturing (US) (15:00)

SPECIAL DIVIDEND PAYMENT DATE
Helios Underwriting

EGMS
Industrial Mlulti Propety Trust

AGMS
Altitude Group, Booker Group, Mobile Tornado Group, Palace Capital , Sainsbury (J), Shires Income, Summit Germany Limited, TechFinancials (DI)

TRADING ANNOUNCEMENTS
Booker Group

FINAL DIVIDEND PAYMENT DATE
Air Partner, Helios Underwriting, Hunting, Laird, Restaurant Group