£40m pre-tax profit sees housebuilder back in the black for first time since 2008
Housebuilder Barratt will return to pre-tax profit for the year to 30th June 2011, the first time it has achieved a full year profit since 2008.
In a trading update to the city today, the housebuilder said it will record a pre-tax and exceptional profit of £40m for the year, although tax and the cost of its refinancing will drive to an overall marginal loss.
Real-time Share PriceChief executive Mark Clare said the performance had been on a “standard” spring selling season. He said sales were challenging outside of London and restricted by a lack of high loan-to-value mortgage lending. He said: “It’s the usual we’ve seen for the last couple of years. We call it the new normal.”
Clare said Barratt, which will report completions of 11,171 homes in its full year results in September, said that he expected to increase completions by a further 5-10% next year, at the same time increasing the operating margin. This would be achieved by “keeping on opening outlets,” Clare said.
The operating margin for the second half of Barratt’s financial year reached 7.8%. Clare said an increase in the rate of cancellations in the year, from 18% to 20%, was due to “probably coming out of the blocks a little over-enthusiastically” after Christmas, when selling conditions picked up, rather than any change in the availability of mortgages.
Clare said: “Whilst we have seen some recovery following the difficult Autumn selling season, trading conditions in some areas outside London and the South East remain challenging. In London, we continue to benefit from a strong market position, with our developments selling well. FirstBuy is a timely boost and is already proving popular, but market recovery cannot be sustained without improved lending conditions. Our focus remains on improving margin rather than driving volumes.”