Barratt Developments - Co. forcast record profits this year

Wednesday, 5th September 2018 11:28 - by Rajan Dhall

The UK's largest homebuilder delivered a good earnings report this morning with Profit before tax up 9.2%. There are some serious questions being asked in the sector as reports flood in of the Help to Buy scheme ending and the negative affects of Brexit. Below are some highlights from the report:

·      Strong financial and operational performance for the full year

·      Leadership of quality and customer service recognised through both 14 consecutive years of achieving more NHBC Pride in the Job Awards than any other housebuilder and receiving the HBF maximum 5 Star customer satisfaction rating for nine consecutive years

·      50 bps of operational margin improvement as our margin initiatives have started to deliver

·      Profit before tax up by 9.2% to £835.5m

·      4.7% increase in final ordinary dividend per share to 17.9p (2017: 17.1p) together with 17.3p (2017: 17.3p) special dividend per share, resulting in a total dividend for the financial year of 43.8p (2017: 41.7p)

·      Forward sales (including JVs) up 11.1%, as at 2 September 2018 at £3,054.0m (3 September 2017 at £2,749.9m)

·      Net private reservations per active outlet per average week from 1 July were in line with the prior year at 0.75 (FY18: 0.74)

David Thomas, Chief Executive of Barratt Developments PLC said ''Our continued focus on operating efficiencies and margin initiatives is starting to deliver and we have today announced new medium term operational targets reflecting our confidence in the business going forward''.

Price action leading into the report was pretty bearing on the weekly chart. Volume has also looked pretty thin in comparison to recent history, this makes me think the market is pretty hesitant as the sector pulls out pretty decent reports but the overall landscape is uncertain. I think the market will look at this report in a good light initially but overall the underlying bearish factors will prevail. The closest main value area (Volume Profile) is around the 560p mark so we could see some resistance there if we get close.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.