House building firm Barratt Developments is paying down its debt faster than expected, after a solid second half of 2011.
Revenues in the second half of last year were around the £950m mark, up some 8% on the corresponding period of 2010. The increase was driven by a higher number of house completions and an increase in the average selling price (ASP); the ASP rose 3% year-on-year to £181,000.
Total completions for the period were 5,198 units, up from 4,832 in the second half of 2010, with private completions of 4,028 (3,669), social housing completions of 1,089 (1,127) and joint venture completions of 81 (36).
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Net debt as at 31 December 2011 was lower than previous guidance at around £550m, reflecting higher than anticipated completions in the period, on-going control of working capital, and the timing of land payments.
"We are reducing our guidance on net debt for 30 June 2012 to c. £350m to £375m," the company said.
Group operating profit for the six month period - the first half of the company's financial year - is expected to be around £61m, up 40% on the interim stage the year before, with the operating margin improving to around 6.4% versus 5.0% at the half-way stage the year before.
Total forward sales as at 31 December 2011 were up 8.1% on the prior year equivalent period at £698.1m, with private forward sales up 29.8% to £415.3m.
"Whilst there remains considerable uncertainty surrounding the outlook for the macro-economic environment, in the first half of our financial year we have seen relative stability within our marketplace. We welcome the government's new housing strategy and believe it will have a positive impact on the industry," the company said.
The shares rose 4.3p to 101.3p in early trading on the day of the update.
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