Barratt profits buoyed by strong house sales in Scotland
A strong sales performance north of the Border has helped cement a healthy six months of trading for Barratt Developments.
The housebuilder has reported a rise in half-year profits after notching up a large number of completions outside London, citing particularly strong regional sales performances in the North, Scotland, North West and West Midlands.
The firm said pre-tax profits rose 8.8% to £321 million in the six months to December 31, despite revenue falling 3.2% to £1.8 billion.
Director David Thomas said: “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.”
Total completions were down 5.8% to 7,180 with a slowing property market in London dragging on performance.
Completions in London came in at 367 versus 842 in the same period last year, although Barratt expects sales in the capital to pick up in the second half of the year.
Mr Thomas said: “With a record forward order book, strong consumer demand and a positive lending backdrop, we remain confident in our outlook for the full year.
“Our confidence in the business going forward is reflected in the improved and extended capital return plan.”
The group said the “fundamentals” of the housing market remain robust, with strong demand supported by good mortgage availability and the Help to Buy scheme.
The firm said: “There remains a long term housing shortage of all tenures that can be addressed through additional supply in the right locations. We are committed to playing a leading role in addressing this issue.”
Barratt currently has a land bank of 77,000 plots and is continuing to explore new ways of alleviating skills shortages.
It said: “On labour, we continue to see some pressure on skilled labour supply with shortages remaining location and trade specific. However, whilst labour costs are still rising, the rate of increase is moderating.
“We are also seeking to increase construction efficiency and reduce demand on labour through the use of alternative build options such as timber frames, large format block and light gauge steel frames.
“We are implementing a number of key initiatives in terms of improving efficiency.
“In addition to building around 1,300 homes during FY17 using timber frames we have completed trials of light gauge steel frames and large format block which give the business additional options with similar benefits as timber frame ensuring we are future proofing our business.
“We continue to trial various offsite technologies and innovative products and we are investing in research into smart technologies.”