UK housebuilders are alive and kicking, if half-year results from Barratt Developments (BDEV) are anything to go by. Trading in the last six months of 2018 saw operating margins up from 17.9 per cent to 19.2 per cent, while the return on capital employed (ROCE) rose from 28.3 per cent to 29.5 per cent.
The outlook is bullish too, with forward sales up 7.3 per cent from a year earlier, at £3.02bn. Cash generation remained strong, and as well as returning an extra £175m to shareholders in November this year, it is now proposing to repeat this in November 2020. But while a special dividend is the preferred method, Barratt may use some of the funds to buy back shares.
The group remains focused on delivering medium-term targets of 3-5 per cent volume growth, land acquisition at a minimum gross margin of 23 per cent and a minimum ROCE of 25 per cent.
Total completions grew by 4.1 per cent to 7,622 homes, and £338.2m was spent on acquiring further land with a development potential of 9,576 plots. Land creditors as a percentage of the owned land bank have fallen from 36.7 per cent a year earlier to 32.1 per cent, with a target of 25-30 per cent over the medium term.
Analysts at Peel Hunt upgraded their forecasts for adjusted pre-tax profits and EPS to £870m and 69.6p, respectively, for the year to June 2019 (from £835.5m and 66.5p in 2018).
| BARRATT DEVELOPMENTS (BDEV) | ||||
| ORD PRICE: | 560.8p | MARKET VALUE: | £5.69bn | |
| TOUCH: | 560.8-561.2p | 12-MONTH HIGH: | 569p | LOW: 430p |
| DIVIDEND YIELD: | 4.9% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 448p* | NET CASH: | £388m | |
| Half-year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 1.99 | 343 | 27.1 | 8.6 |
| 2018 | 2.13 | 408 | 32.7 | 9.6 |
| % change | +7 | +19 | +21 | +12 |
| Ex-div: | 11 Apr | |||
| Payment: | 07 May | |||
| *Includes intangible assets of £892m, or 88p a share | ||||
