Barratt share price muted despite 75% rise in first-half profit

Barratt Developments’ (LON:BDEV) share price swung between gains and losses this morning, after the FTSE 100-listed housebuilder published its half-yearly financial report. The group posted profit before tax for the six months to December 31 of £210.2 million — a 74.6 percent rise compared to the same period a year earlier.

CEO Mark Clare attributed the profit jump to a streamlining of operations and investment in the company’s land portfolio at the right time in the cycle. He said: “Since 2009 we have committed to invest over £4 billion in land for new housing and this is now paying off. Our investment programme and the improvements to the business have driven a significant step up in our financial performance in the past year including a 75 per cent increase in profit before tax.”

Barratt’s revenue came in at £1.6 billion, marking a 25 percent increase year-on-year. Completion volumes grew 12.5 percent to 6,971, while its total average selling price rose 8.5 percent to £229,200. Barratt further noted that its second half has begun strongly, with net private reservations per week of 279 for the first eight weeks of 2015. Total forward sales as at 22 February 2015 were up 17.5 percent against strong comparatives from the prior year at a value of £2,275.3 million from 10,740 plots. “We are confident in the outlook for the group and expect to deliver a strong performance for the full financial year and make further significant progress towards achieving our medium term targets,” Clare stated.

After a significant dip this morning, Barratt’s share price edged higher and by 10:28 GMT, it had gained 0.50 percent to 506.00p. According to the Financial Times, the 14 analysts projecting 12-month price targets for the FTSE 100-listed retailer, have a median target of 499.50p, with a high estimate of 585.00p and a low of 379.00p. As of 20 February 2015, the consensus forecast amongst 24 polled investment analysts covering Barratt has it that the company will outperform the market.
As of 11:01 GMT, Wednesday, 25 February, Barratt Developments Plc share price is 505.50p.