Full-year completions at nine year high says Barratt

Barratt Developments claimed to be the UK’s largest housebuilder in a trading update on Wednesday, reporting total completions in its full year to 30 June - including those from joint ventures - of 17,395.

The FTSE 100 company said that was 76 more completions than those completed in the 2016 financial year, and was also the highest level of completions in nine years.

Profit before tax was expected to increase to around £765m, the board reported, up from £682.3m and ahead of market expectations.

It said it expected to deliver on its financial targets set in 2014 of 20% gross profit margin and 25% return on capital employed for the 2017 financial year.

The company’s year-end net cash balance stood at £720m, up from £592.0m a year earlier and ahead of guidance, which the board said was driven by “strong performance” and the timing of land and working capital payments.

“It has been another very strong year for the group both operationally and financially,” said chief executive David Thomas.

“We have delivered our highest number of completions for nine years, more than any other housebuilder, and continue to see a positive mortgage environment and strong consumer demand.

“In March we were recognised as a five star builder by the Home Builders Federation for the eighth year in a row and we are determined to lead the industry in quality and service as we drive operational improvements through the business.”

Barratt Developments remained due to publish its annual results for the year to 30 June on 6 September.

Analysts were quick to point out that Barratt’s results went against what the markets thought would happen to the sector in the wake of Brexit.

“Interest rates are still low, the Help to Buy scheme is still in force, and the typical Briton is as keen as ever to own their own home, in a country where households are forming quicker than properties are being built,” noted Hargreaves Lansdown senior analyst Laith Khalaf.

“All of that adds up to a heady mix for the housebuilding sector, which is reaping the rewards of a buoyant property market.”

Khalaf pointed out that Barratt did show some caution in the wake of the EU referendum, and over the course of the year acquired 25% fewer plots of land, which “might not be so good” for the UK’s chronic housing shortage, but did suggest management was willing to exercise prudence.

“Barratt’s share price has risen by 80% since this time last year, an indication of just how deep Brexit fears ran, and how far they have receded since.”