UPDATE: Barratt FY Profit Rises, Well-Positioned For Growth

14th Jul 2010 07:43

(Rewrites. Adds CEO comment, detail.) By Simon Zekaria Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Barratt Developments PLC (BDEV.LN), the U.K.'s largest house builder by volume, said Wednesday that full-year operating profit will more than double, and the company is well-positioned for further margin growth despite a challenging market. "The outlook for the new housing market in the U.K. is likely to remain challenging as a result of continued constraints on the availability of mortgage finance and overall economic concerns", the group said in a trading update ahead of full-year results. But Chief Executive Mark Clare said that "improved operating performance, combined with our success in agreeing terms on higher margin land means that the group is well positioned to secure further margin growth." The company, like fellow U.K. housebuilders, is under pressure to start building on new and cheaply-bought land, to raise recession-battered margins. Operating profit for the twelve months to June 30 is expected to be at least GBP85 million, up from GBP34.2 million in the same period last year. This result is ahead of expectations, the company said. It also said group operating margin for the year will be at least 4%, up from 1.5%. At the peak of the housing boom Barratt achieved margins of 15% to 17%. The company said it completed 11,377 home builds in the year, in line with expectations. The average selling price rose by about 11% to roughly GBP174,000, gaining around 18% in the second half. Barratt is targeting total completions in fiscal year 2011 to be 5% to 10% higher than the previous year. During the year the group opened 106 sites and completed 143 sites, but the average number of active sites for the year fell to 360 from 436. Net debt at June 30 fell to around GBP375 million, lower than previous guidance, the group said. Barratt shares closed Tuesday at 105 pence, valuing the company at GBP1.01 billion. They have fallen 13.6% in the past three months on fears of a renewed slump in home buyers' confidence amid U.K. government spending cuts. -By Simon Zekaria, Dow Jones Newswires; +44 20 7842 9410; [email protected] (END) Dow Jones Newswires July 14, 2010 02:43 ET (06:43 GMT)