how can shorecapital find negative14 Jul 2018 15:22
A strong year
During the year ended to June, Barratt sold 17,578 houses, the highest level since 2008. Sales rates were broadly unchanged and management expects to report a record pre-tax profit of £835m for the year. That’s 9% ahead of last year’s figure of £765.1m.
Net cash at the year-end was expected to be £790m, ahead of guidance and providing firm support for ongoing dividend payments. The company ended the year with a forward order book of £2,175m.
The recent sell-off in the housebuilding sector suggests that the market expects profits to fall. But analysts’ forecasts for Barratt suggest that earnings per share could rise by about 5% to 67.6p next year. The tone of today’s statement suggests to me that management is also confident in this outlook.
Clever building
One of the secrets to Barratt’s resilient profits may be that it’s invested in new housing designs that are faster and cheaper to build. These are being rolled out across the company’s building sites and are expected to deliver higher profit margins. This means that even if house prices and sales volumes are flat, profits should rise.