Barratt issues upbeat trading notice

October 18, 2018 / Isla MacFarlane
Barratt issues upbeat trading notice

Barratt Developments, in a trading update for the 15-week period from 1 July to 14 October, said the group has had a strong start to the financial year.

David Thomas, Chief Executive, said, “The group has started the new financial year in a strong position, with a good sales rate, healthy forward order book and customer demand supported by an attractive lending environment.

“We are focused on delivering our medium-term targets set out at our Full Year results, whilst maintaining our commitment to leading the industry in the design and quality of our homes and in customer service, which we believe is fundamental to our ongoing success.”

Market conditions remain good, the statement said, and the group has traded well since the start of the new financial year. Customer demand remains strong, supported by positive government policy and the wide availability of attractive mortgage finance.

In the first 15 weeks of the financial year net private reservations per active outlet per average week remain strong at 0.72 (2018: 0.74).

Barratt has launched 53 (2018: 62) new developments in the period, a drop from 62 last year. Active outlets have also reduced from 371 to 365. “We continue to expect outlet numbers to grow for the full year when compared to the prior year,” the statement said.

Total forward sales as at 14 October 2018 were up 12.4% on the prior year at a value of £3,146.5m, equating to 12,903 units.

“Good progress is being made with the planned roll-out of the new product ranges and this will increasingly benefit margin going forward,” it said. “We are securing excellent operational land opportunities that meet our new land acquisition hurdle rates, of minimum 23% gross margin and a minimum of 25% ROCE.”

As we set out in the group’s FY18 results, Barratt intends to grow volumes by 3-5% per year. It is also focused on addressing the industry-wide skills challenges by investing further in apprenticeships and by recruiting and training skilled workers from outside of the building industry.

To increase the efficiency of its build process, Barratt said it is assessing, trialling and implementing alternative methods of construction.

In September, the Board recommended a final dividend of 17.9 pence per share (2017: 17.1 pence per share) and a special dividend of £175m (17.3 pence per share).

The total proposed dividend for FY18, including the interim dividend of 8.6 pence per share paid in May 2018, is therefore £442m or 43.8 pence per share (2017: 41.7 pence per share).

“The group has made a strong start to the year,” the statement concluded. “In FY19 we are focused on implementing our new medium term targets throughout the business. The Board is confident of delivering a good financial and operating performance in FY19.”

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