Barratt paves path to profit
Barratt Developments is on track to deliver "a substantial improvement in operating profit" in its annual results, it said this morning. The Coalville-based housebuilder said average selling prices had increased by 4 per cent for the first quarter of the year. It also agreed a debt refinancing package, which provides about £1bn of facilities, until May 2015.
The company's newly agreed debt refinancing facilities will reduce the effective cost of finance going forward, said Barratt.
The housebuilder added that sales had returned "to more normal levels", with net private reservations per week of 0.53 compared with the first half of 2010 (0.39).
First quarter results for the company from 1 January to 8 May 2011 were revealed through an interim management statement to the London Stock Exchange this morning.
Over the three-month period, Barratt opened 55 new sites. It said it expects to open a further 24 by the end of the financial year.
Barratt said it would deliver an improved operating profit in both the second half of 2011 and the full financial year as it plans to drive new higher margin sites and continue its focus on tight cost control.
Mark Clare, group chief executive of Barratt Developments, said: "We are encouraged by the improvement in market conditions we've seen since the start of 2011, following a challenging autumn period.
"Our strategy for recovery is progressing well and we continue to expect a substantial increase in operating profit in our second half. The successful refinancing provides a strong platform for the business and will enable us to reduce the effective cost of financing going forward."
On 8 May 2011, forward sales stood at £1.05bn, similar to the comparable 2010 period in which £1.07bn was recorded.
Clare added that the government's recent Budget announcements contained "a number of positive measures" for the company and housebuilders alike.
"The introduction of a new government backed shared equity scheme, FirstBuy, provides an important selling tool for the industry given the limited availability of higher loan to value mortgages, particularly for the new build sector," he said.
"The group has a strong track record of maximising the benefits of the previous HomeBuy Direct scheme, and this new initiative is likely to reduce the requirement for our own shared equity products going forward."
