Barratt’s profits milestone as focus on family pays off

Underlying profits were £42.7m in the year to June 30, up from a loss of £33m a year earlier, and described by chief executive Mark Clare as an important milestone for the group.

“We have made considerable progress in rebuilding profitability – by optimising selling prices, improving operational efficiency and securing new higher margin land,” he said.

Completions, or unit sales, fell slightly to 11,171, but higher selling prices, especially on the private sale side, held revenue steady at £2.04bn.

The group, which also trades as David Wilson and Ward Homes, intends to increase completions in the current year with the number of active sites due to rise to 400 from 354.

Forward sales were down slightly at September 11 on the previous year at £855.7m.

Barratt said private sale reservations were up by 10.2 per cent since the start of the new financial year, with prices also likely to rise again.

The average price for a privately sold Barratt home rose by 7.4 per cent to £198,900 in the year to June with the proportion of houses sold up from 60 per cent to 66 per cent.

The group, which also got a lift from its strong presence in the buoyant London market, said it expects houses to account for 70 per cent of sales in the year to June 2012.

Operating profits jumped by 50 per cent to £135m as in addition to higher prices, average building costs fell by 1.4 per cent. The group is also now operating from sites where land was bought more cheaply than in previous years.

Brokers said the figures were slightly better than expected, although after one-off costs the Coalville-based firm still posted a bottom line loss of £11.5m.

Chris Millington, an analyst at Numis, said the housebuilder should continue to see strong profit growth this year supported by higher volumes and selling prices.

These two factors are expected to support 8.5 per cent revenue growth, which alongside improving margins through building on cheaper land should lead to profits before tax more than doubling in the current year, he added.

Barratt, which according to a source is interested in developing the 15-acre former east London home of News International, confirmed it is looking at the site.

“At the moment, like everyone else, we are looking at it but that’s as far as it goes.

“It’s too early to say that it is something that we are really interested in,” Mr Clare said.