Barratt reports record 45 per cent pre-tax profits increase
Barratt Developments has reported a record 45 per cent jump in profits on the back of continued strong demand for new homes.
Buoyed by sturdy housing market and increased mortgage availability thanks to Help to Buy, the group posted pre-tax profits of £565.5 million for the 12 months to the end of June, up from £390.6m the year before.
The housebuilder was helped by an 11 per cent rise in completions over the year, taking the total of new homes built to 16,447 including joint ventures. This marked its highest total in seven years.
A combination of the type of house sold and house price inflation saw average house prices rise by 8.7 per cent to £262,500 over the past year.
Barratt has also approved 16,956 new plots for purchase, and chief executive David Thomas said the company was expecting further growth.
He said: “The strong operational and financial performance reinforces the progress we have made over the past few years.
“The new financial year has started very well. We have a strong forward sales position and are making very good progress towards our 2017 targets of at least a 20 per cent gross margin and at least a 25 per cent return on capital employed.”
Mr Thomas added that Barratt was exploring technical innovations to make these numbers even better.
He said: “We are implementing a number of quick wins in terms of lowering build costs, for example we expect to build c. 1,300 timber frame homes in FY16.
“Other innovations in the build process implemented during the year include new roofing and flooring solutions and we have started to trial other new products having assessed over 100 offsite construction suppliers. We are also looking to embrace the best methods of on and offsite construction to increase efficiency.”
John Allan, chairman of Barratt, added: “The market for new homes remains strong across Britain, with demand continuing to exceed supply. The mortgage market has continued to improve both in terms of availability and rates, as well as government support for the new-build market.
“Against this strong market backdrop we are delivering ongoing improvements in our own performance across all aspects of our operations.”