Barratt Developments (LON:BDEV) has updated investors on its recent trading, ahead of its full-year results.
Highlights from the company statement:
· Profit before tax expected to increase to around £765m (2016: £682.3m), ahead of market expectations(1)
· Expect to deliver our financial targets set in 2014 of 20% gross profit margin and 25% return on capital employed ('ROCE')(2) for FY17
· Year end net cash(3) balance of c. £720m (30 June 2016: £592.0m), ahead of guidance, driven by strong performance and the timing of land and working capital payments
The Group has traded well throughout the year, once again delivering against our financial and operational targets. Market conditions remain supportive, with attractive mortgage financing and the support of Help to Buy driving strong consumer demand.
Completions (including JVs) for the period were 17,395 units (2016: 17,319 units). Affordable housing represented 20% (2016: 17%) of total completions.
Profit before tax for the period is expected to be around £765m (2016: £682.3m) and ahead of market expectations. We expect to meet our FY17 financial targets, set in 2014, of 20% gross profit margin and 25% ROCE, with ROCE expected to increase to around 29% (2016: 27.1%).
Total average selling price ('ASP') on completions in the year increased by c. 5.9% to c. £275k(4) (2016: £259.7k), with private ASP increasing by c. 8.0% to c. £313k (2016: £289.8k) benefiting from mix changes as well as some underlying house price inflation.
The sales rate for FY17 was 0.72 (2016: 0.69) net private reservations per active outlet per week in the full year and 0.76 (2016: 0.72) in the second half. During the year, we operated from an average of 377 active outlets including JV's (2016: 378).
In FY18 we expect to deliver modest growth in wholly owned completions year on year.
We will update on current trading and our guidance for FY18, alongside our full year results announcement on 6 September 2017.