Given the current health of the housebuilding sector, a 9 per cent rise in half-year profit for Barratt Developments (BDEV) was pretty much as expected. But there was a pleasant surprise on the dividend front as the housebuilder reset the level of ordinary dividend cover from three times net earnings to 2.5 times. There will be special dividend payments as well, and the total package for the year to November 2017 is being targeted at 39.3p a share; that's a yield of 7.5 per cent.
Completions outside London were the highest for nine years at 6,813 although overall completions were down a little as completions in London fell from 842 to 367 - a significant increase is expected in the second half, though. Operating margins grew from 16.1 per cent to 17.8 per cent, helped by higher margins on new sites and a change in the housing mix.
Land purchases were down to £328m from £559m a year earlier, in line with the more cautious approach following the EU referendum. Land prices remained benign, and minimum hurdle rates of 20 per cent gross margin and 25 per cent return on capital employed were met or exceeded.
Analysts at Peel Hunt are forecasting adjusted pre-tax profit of £717m and EPS of 57.6p for the year to June 2017 (from £682m and 55.1p in FY2016).
| BARRATT DEVELOPMENTS (BDEV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 526p | MARKET VALUE: | £5.3bn | |
| TOUCH: | 526-526.5p | 12-MONTH HIGH: | 587p | LOW: 317p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 397p* | NET CASH: | £197m | |
| Half-year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 1.88 | 295 | 23.9 | 6 |
| 2016 | 1.82 | 321 | 25.9 | 7.3 |
| % change | -3 | +9 | +8 | +22 |
Ex-div: 20 Apr Payment: 19 May *Includes intangible assets of £892m, or 89p a share | ||||
