Barratt says full year profit to exceed expectations
LONDON, July 10
LONDON, July 10 (Reuters) - British housebuilder Barratt Developments said it expects to post full year profit above the top end of analyst expectations, after government schemes to help struggling homebuyers sent sales up sharply.
Britain's largest housebuilder by volume forecasted 2013 profit before tax to be 192 million pounds ($285 million). Analysts were expecting the company's profits to be between 170 to 191 million pounds, Thomson Reuters data showed.
"As more house buyers return to the market, supported by improved mortgage availability and the Help to Buy scheme, we are in a strong position to continue to grow the value of the business," Chief Executive Mark Clare said on Wednesday.
"We are increasing our investment in land whilst reducing debt and have delivered a performance ahead of expectations."
The company said its sales rate rose by 17.9 percent in the second half compared to the prior year, while the average net private reservations per active site per week was 0.66.
Its sales rate rose by 34.7 percent since the government's so-called 'Help to Buy' scheme kicked off in April, Barratt said. Total forward sales were up 53.6 percent to 829.7 million pounds at the end of June.
The company and its competitors such as Persimmon and Taylor Wimpey have seen sales and reservations jump in the months since the government unveiled plans to support struggling house buyers with billions of pounds in loans.
Their profits have also been helped by a strategy of buying land cheaply during the financial crisis, which has boosted their margins, and by building more lucrative family homes rather than city centre flats.
Barratt said completions, including joint ventures, totalled 13,663 for the full year, and that private completions were up by 16.1 percent in the second half. Its average selling price was up 9 percent over the period, reflecting its changing mix of homes.
It said it could hit its target of completing 16,000 homes earlier than expected due to the strong demand generated by the Help to Buy scheme.
In a separate statement, it said its London unit has formed a joint venture with a fund managed by Morgan Stanley Real Estate to build 770 homes on the banks of the River Thames in London which has a development value of 275 million pounds.
Shares in Barratt closed at 342.9 pence on Tuesday, valuing the company at 5.02 billion pounds.
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