Profit surges at Barratt Developments while revenue and completions dip

Housebuilder Barratt Developments posted its half year results to 31 December on Wednesday, reporting completions outside of London as being at their highest level for nine years.

The FTSE 100 company said London completions were in line with the planned build programme, with significant uplift expected on wholly owned sites in the second half.

Total completions stood at 7,180 plots, down 5.8%, with total revenue dipping 3.2% to £1.82bn.

Barratt’s gross margin for the period improved 2.1 percentage points year-on-year to 20.7%, while its profit from operations was up 7.4% at £324m.

Half year profit before tax for the period was £321.0m, up 8.8%, off an operating margin of 17.8%, an improvement of 1.7 percentage points.

The board declared an interim dividend per share of 7.3p, a 21.7% uplift.

Return on capital employed stood at 27% for the half-year, up 1.5 percentage points, while net cash improved 712.8% year-on-year to £196.7m.

“As we reported in the January trading update, we have delivered another very strong first half performance, pre-tax profits were up nearly 9% and completions outside of London at their highest level in nine years,” said chief executive David Thomas.

“Whilst we have increased volumes across the UK by 55% in the last five financial years, we have maintained our commitment to build quality and customer service and we are the only major housebuilder with the HBF 5 Star Customer Satisfaction Award.”

Thomas said, with a record forward order book, strong consumer demand and a positive lending backdrop, the board remained confident in its outlook for the full year.

“Our confidence in the business going forward is reflected in the improved and extended Capital Return Plan.”