Barratt Developments H1 profits up but warns on home shortage

27th Feb 2014 07:17

Barratt Developments completed the highest level of home deals in five years as it posted a 73 per cent rise in operating profit to 139.5m pounds, but warned that a housing shortage was unlikely to ease in the short-term.The house-builder said completions in the six months to December 31st rose 19% to 6,195 while revenue lifted 33% to £1.3bn.Barratt also said it had a very strong start to the second half and expected annual profits towards the top end of market hopes.It said an interim dividend of 3.2p per share reflected a move to three times dividend cover two years ahead of target and expects to make total dividend payments of about £365m in the three years to the end of 2016.Chief Executive Mark Clare said: "We have been able to increase the number of new homes we are building whilst driving up profitability, return on capital and dividends. Our momentum has continued into 2014 with sales rates well above last year and forward sales of £1.7bn."Clare said the group was seeing a broad based recovery in terms of income, with higher average sales rates across all regions.He said the UK government's Help to Buy mortgage incentive scheme had given an extra boost to the recovery.There have been concerns that it would cause a house price bubble as rising demand outstrips supply.Clare said Barratt had increased its output by 19% in the half-year against a year ago and expects to build about 45,000 new homes in the next three years.He said: "Whilst both the market for new homes and build rates are improving, the shortage of homes will not be fully resolved in the short-term."Barratt said increased activity levels across the sector had caused some pressures on the industry supply chain, material costs and sub-contract labour costs, although it believed its needs in the next year would be met.PW