Completions higher than expected at Barratt

House building firm Barratt Developments is paying down its debt faster than expected, after a solid second half of 2011.

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.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

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.

jh

MoneyWeek

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.