House builder Barratt Developments swung into the blue in the first six months of the year and said that the second half has started strongly with a substantial increase in private reservations.
Pre-tax profit in the first half ended December 31st jumped to £21.6m, compared with a loss of £4.6m the year before and well ahead of the £15m that Panmure Gordon was expecting. Earnings per share came in at 1.3p, up from a loss of 0.9p previously.
The improvement was driven by the increase in both average selling prices (+3.1% at £181,200) and operating margin (increasing from 5% to 6.4%) in addition to a reduction in interest costs.
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The company said that the results reflect "reflect both the greater stability of the market over the last 12 months of the delivery of our objective to rebuild profitability".
Revenue totalled £952.8m, up 8.6% on the £877.6m generated in the first half of 2010.
Barratt managed to increase house building completions from 4,796 to 5,117 year-on-year, with a fall in social housing completions being offset by private completions.
"Over the last six months we have continued to improve the performance of the business, despite the wider economic uncertainty. We have delivered a further substantial increase in profits and recently acquired high margin land is now driving further recovery," according to Chief Executive Mark Clare.
"We have seen a strong start to 2012 and over the first seven weeks private reservations are running 21.8% ahead of this time last year," he said.
Net debt was £542.2m at the end of the period, down from £537m the year before.
The group said it did not consider it appropriate to pay an interim dividend (2010: nil) as it attempts to improve its profitability further and strengthen its financial position, whilst continuing to investment in new sites.
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