Barratt Developments sees 45% rise in full-year pre-tax profit

9th Jul 2015 07:10

Shares in housebuilder Barratt Developments got a boost after the company said it expects to see a 45% increase in full-year pre-tax profit to £565m, from £390.6m last year amid continued strong demand in the housing market.In a trading update for the year ended 30 June 2015, it said the average selling price for private homes was up around 8% to £262,000, driven by further changes in mix and underlying house price inflation.Meanwhile, total completions, including joint ventures, increased by 10.8% to 16,447 from 14,838 reflecting strong consumer demand and increased site numbers.The total average selling price rose about 7% to £235,000.Barratt said the group had traded well throughout the financial year, delivering a strong improvement in performance across all financial metrics.With good demand for new homes across all six of its operating regions, the company focused on maximising sales while driving financial performance.It continued to see a positive mortgage lending environment, with increased competition among lenders and new market entrants resulting in very low rates for its customers.Chief executive David Thomas said: "The housing market has remained strong and our operating performance has been very good. Over the last 12 months we have opened 176 new developments, increased our housing completions by 11% and committed £1bn of land investment for future housing. We start the new financial year with very strong forward sales and are well on the way to meeting our full-year 2017 targets of a 20% gross margin and at least 25% return on capital."Hargreaves Lansdown said: "As guided at the time of the third quarter update, Barratt Developments has put in yet another sterling performance."It said reservations and completions figures were robust, while the net cash position is also improving healthily and the accompanying outlook comments are reassuringly upbeat.RBC Capital Markets said the update reads well and market conditions have remained very positive.It noted that management's guidance for pre-tax profit of £565m compares favourably to consensus expectations of £556m, driven by better completions, while the net cash position is much better than expected."The stock came off on the budget yesterday - we expect this update to reassure," it said.At 08:33, shares were up 2.3% at 608.50p.