* Average sale price up 13 pct
* Reflects shift to higher-margin properties
* CEO points to increased activity in all regions
* Macroeconomic concerns still weigh on shares
(Adds analyst, further quotes)
By Paul Sandle
LONDON, July 10 Barratt Developments
expects full-year profit to more than double to about 390
million pounds ($664 million), thanks to an increasingly buoyant
British housing market and a greater focus on larger homes.
Britain's biggest housebuilder by volume highlighted its
strategy shift and improved demand in a trading update
trumpeting profit that would comfortably beat analysts'
The company said it sold 14,838 homes in the year to June
30, with the average price up 13 percent to about 220,000
That rise in the average price reflected a shift to bigger
family homes from city centre apartments, Barratt said, taking
advantage in recent years of opportunities to buy land that can
be developed with properties offering higher profit margins.
Barratt joins rivals such as Taylor Wimpey, Bovis
and Persimmon in issuing bullish trading
statements this month, reflecting a broad recovery in the
Yet shares across the sector have fallen by an average of
about 12 percent in recent months, with Numis analysts citing
concerns that restrictions on mortgage lending and a rise in
interest rates could hit the market.
House prices rose 8.8 percent year on year in the three
months to June 30, the fastest annual growth since October 2007,
mortgage lender Halifax said on Wednesday.
Barratt Chief Executive Mark Clare said the group's
completions were at their highest level for six years and have
increased by a third over the past three.
"The recovery has extended beyond London and the South East,
and we are seeing increased confidence and activity in all the
regional markets," he told Reuters on Thursday.
"We are pleased with our continued success in the land
market and are still securing excellent opportunities."
Shares in the company, which have fallen 19 percent over the
past three months after hitting a six-year high in March,
reversed early rises to trade 1.9 percent down at 358 pence by
Peel Hunt analyst Clyde Lewis said his forecasts would "edge
ahead" next year as a result of the update, even though volume
expectations are slightly tempered.
Barratt's average selling price had increased by a little
bit more than expected, he said, though the 9 percent rise in
volumes was a little less than expected.
"Barratt, like the rest of the sector, has struggled in the
past few months and now stands about 20 percent off its 12-month
high, despite seeing nothing but upgrades," Lewis added.
The sell-off reflected concerns over the danger of the
housing market overheating and likely policy tightening from the
Bank of England, but Lewis said he believes that such worries
have been overblown.
Barratt's Clare said the group had seen "little or no
impact" from tougher mortgage lending guidance.
"Nobody wants house prices to race away," he said.
"Affordability is a key measure that we look at, so anything
that the Bank of England can do to smooth the cycle is helpful.
For us, it's a sensible intervention."
Clare said the strength of the market had enabled the group
to meet its target of an 18 percent return on capital employed
two years earlier than expected.
Barratt used to achieve sector-leading return on capital,
according to analysts at Numis, but the situation changed when
it bought Wilson Bowden in 2007.
The group's management has expressed its desire to improve
that situation with a high level of forward sales and by
purchasing sites where upfront infrastructure costs are minimal,
Barratt said forward sales had jumped 44.7 percent to 1.2
billion pounds in the 12 months to June 30 and it expects
further significant improvement in the current financial year.
The company is due to report official full-year results in
($1 = 0.5877 British Pounds)
(Editing by David Goodman)