Barratt Developments (BDEV) joined in the housebuilder bonanza by more than doubling profits in the first half and projecting that borrowings will be eliminated by June 2015. The company is making significant progress on this front; at the half-year end, net debt had been reduced from £542m a year earlier to £331m, and Barratt reckons this will drop to £160m by the June year-end. The board also promised to pay a final dividend this year and to achieve cover of around three times after tax earnings for the year to June 2016.
In the six-month period, average selling prices rose a modest 2.4 per cent to £185,500, while completions were largely unchanged at 5,085 units. However, greater use of cheaper land helped to boost operating margins from 6.4 per cent to 8.5 per cent, and expect further improvement as the number of completions using cheaper land should reach 85 per cent of the total by 2015. Moreover, average net private reservations per site are up by 4.9 per cent in the past eight weeks, while underlying selling prices have remained steady.
Deutsche Bank is forecasting full-year pre-tax profits of £179m, EPS of 13.7p and a dividend of 2.74p, rising to £276m, 21.4p and 7.1p in 2013-14 (from £111m, 7.97p and nil in 2012).
| BARRATT DEVELOPMENTS (BDEV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 234p | MARKET VALUE: | £2.29bn | |
| TOUCH: | 233-234p | 12-MONTH HIGH: | 243p | LOW: 112p |
| DIVIDEND YIELD: | nil | PE RATIO: | 26 | |
| NET ASSET VALUE: | 307p* | NET DEBT: | 11% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 953 | 21.6 | 1.30 | nil |
| 2012 | 951 | 46.1 | 3.40 | nil |
| % change | - | +113 | +162 | - |
*Includes intangible assets of £892m, or 91p a share | ||||
