Barratt unveils new growth targets

These powerful projections are underpinned by what was another very strong performance, with all the key metrics travelling in the right direction, and pre-tax profits reaching a record high. Average selling prices rose by 5 per cent to £288,900, which was more than enough to cover cost input inflation of between 3 and 4 per cent, helping to lift operating margins by 50 basis points to 17.7 per cent.

The business model throws off a lot of cash, and another special dividend has been proposed of 17.3p a share, which together with the ordinary dividend boost the yield to a sector-leading 8.2 per cent. Completions rose from 17,395 to 17,579, and with a new division opening in Cambridgeshire, there is the capacity to increase output to 20,000 under the current operating structure.

Return on capital employed benefited from deferred payment for some land purchases, although land creditors as a percentage of the owned land bank eased from 37 per cent to 34 per cent, with a target of between 25 and 30 per cent over the medium term.

With land prices remaining benign, a total of £933.9m was spent on land purchases, which equates to 20,951 plots, up from 18,497 a year earlier, and to support its growth target between 18,000 and 22,000 plots will be acquired each year for the next three years.

Cost control remains a key focus for the group, with 90 per cent of materials manufactured or assembled in the UK. And while there is still some pressure on labour costs, demand for skilled labour is being reduced through the use of alternative techniques such as timber frames and large format blocks, with over 1,900 units sold using these applications.

Prior to any upgrades, analysts at Peel Hunt are forecasting pre-tax profits for the year to June 2019 of £880m and EPS of 70.4p (from £836m and 66.5p in 2018).