Barratt profits rise 40 per cent as margins improve
House builder Barratt has reported a 40 per cent increase in profits for the six months to 31 December 2011 compared with the equivalent period of 2010.
In a trading update issued this morning the builder says it expects group operating profit for the period to be £61 million, with its operating margin improving from 5 per cent to 6.4 per cent.
Earlier this week Barratt’s larger rival Persimmon said it is expecting to announce a 50 per cent increase in pre-tax profit when its annual results are released next month.
The increase in profit at Barratt is mainly due to the improving margin rather than a sharp increase in turnover or completions. For the six months to 31 December its revenues are up 8 per cent, to £950 million.
Completions for the period were also up slightly, from 4,832 in 2010/11 to 5,198. Social housing completions fell from 1,127 units to 1,089, meaning they accounted for 21.3 per cent of work, down from 23.5 per cent the previous year. For the full year Barratt is expecting social housing to represent around 20 per cent of completions.
Commenting on the Laying the foundations housing strategy, the group said the most potentially important development is the introduction of the new build indemnity scheme, which will offer government security to help buyers access 95 per cent mortgages.
In the trading update it says: ‘If the scheme is successfully implemented, it will substantially reduce the customer deposit required and be more cost efficient than shared equity products.’