Barratt’s Share Price: Full-Year Profit to Top Expectations

on Jul 10, 2013
Listen Wednesday, July 10th: Shares in Barratt Developments (LON:BVT) surged almost three percent at the opening bell in London today after the British homebuilder issued an upbeat full-year trading update.

Barratt Developments, which will announce full-year results on September 11, said in the trading update for the year ended June 30 that profit before tax and exceptional items was expected to be around £192 million, ahead of the top end of market expectations. According to Thomson Reuters data, analysts’ estimates are in the range of £170 to £191 million.

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The UK’s largest homebuilder by volume said that total forward sales were up 53.6 percent to £829.7 million at the end of June, while completions, including joint ventures, totalled 13,663 for the full year. The company’s average selling price was up nine percent over the period under review.
Sales rate was up 17.9 percent in the second half compared to the prior year, with average net private reservations per active site per week of 0.66. Sales rate has increased 34.7 percent since the launch of the government’s Help to Buy scheme in April, the company noted.

“As more house buyers return to the market, supported by improved mortgage availability and the Help to Buy scheme, we are in a strong position to continue to grow the value of the business,” Barratt’s Chief Executive Officer Mark Clare said in the trading update, echoing peers’ recent reports, the most recent of which was released on Monday by Bovis Homes (LON:BVS) (Bovis Share Price Jumps on Upbeat Trading Update).

Commenting on the company’s growth prospects, Clare said: “Momentum is continuing to build and with forward sales up substantially, we are confident we can improve our performance still further in the year ahead.” Barratt also said it could meet its target of completing 16,000 homes earlier than expected due to the strong demand generated by the Help to Buy scheme.

Barratt has also stepped up land buying, with more than £1bn worth of purchases. “We are increasing our investment in land whilst reducing debt and have delivered a performance ahead of expectations,” the CEO noted.
**Barratt Sets up JV with Morgan Stanley Real Estate to Build 770 Riverside Homes in Greenwich**
In a separate statement today, Barratt announced that it had agreed to form a 50/50 joint venture with a fund managed by Morgan Stanley Real Estate Investing to build 770 homes with a gross development value estimated at £275 million on a riverside site in the Royal Borough of Greenwich.
!m[Homebuilder Teams up with Morgan Stanley Real Estate for Greenwich Development](/uploads/story/3830/thumbs/pic1_inline.PNG)
The historic 8.9 acre site has 130 metres of river frontage and is located between the centre of Greenwich and the O2. Barratt will start construction of the residential units this autumn, while Morgan Stanley will work with development manager West Properties to deliver some commercial assets, including a cruise terminal and a hotel.
**The Barratt share price soared at the opening of today’s trading session in London, advancing 2.71 percent to 350.50p. After reaching a session high of 355.50p, the stock retraced some gains and as of 09:00 BST it stood at 344.50p, 0.47 percent above the previous day’s closing level.**


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