Barratt Developments hails 'record' H1 completions, declares dividend
By Michele Maatouk
Date: Thursday 04 Feb 2021
(Sharecast News) - Barratt Developments said on Thursday that first-half pre-tax profit edged higher amid record completions, as the housebuilder declared an interim dividend.
In the six months to the end of December 2020, pre-tax profit edged up 1.7% to £430.2m on revenue of £2.5bn, up 10.1% on the same period a year ago. Barratt hailed "record" first-half completions, up 9.2% to 9,077.
The company attributed the growth to underlying market strength, pent-up demand following the initial national lockdown and demand resulting from the stamp duty holiday and the end of the Help to Buy scheme in March.
Growth in completions helped to lift adjusted operating margins to 20.3% from 19.4% in 2019.
In light of its performance, Barratt said it was resuming dividend payments, with an interim dividend of 7.5p a share. It continues to target a full-year dividend based on a dividend cover of 2.5 times full-year earnings.
The housebuilder said it has had a solid start to the second half, with 264 net private reservations per average week compared to 294 in 2020, and operated from an average of 343 outlets versus 355 a year ago.
Barratt reaffirmed its outlook for the full year, with wholly-owned completions expected to be between 15,250 and 15,750 homes.
Chief executive David Thomas said: "We have achieved a fantastic first half performance, with a strong rebound in completion volumes and good progress towards our medium term targets.
"We have also made a solid start to the second half and are now over 95% forward sold for our financial year. Whilst we are mindful of the continued economic uncertainties, the housing market fundamentals remain attractive and our outlook for the full year remains in line with expectations."
At 0920 GMT, the shares were up 2.6% at 691p.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "Brick by brick, viewing by viewing and sale by sale, this is an impressive recovery but cracks could still appear later this year. There are fears that the housing market mini boom could fizzle out with stamp duty relief and furlough schemes scheduled to come to an end in the Spring.
"The restriction of the help to buy scheme to first time purchasers only, may also weigh on demand. If house prices fall Barratt could struggle to make money on the land its already bought.
"However Barratt developments balance sheet has been strengthened by this strong period of cash generation. It has also made an impressive start to the second half with a thick order book of 95% forward sold for the financial year.
"There are also reasons to be hopeful longer term as the fundamentals of the UK market are still attractive. Low interest rates are supporting mortgage affordability and an ongoing housing shortage is likely to continue to underpin demand.'"
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