More on Barratt
Barratt Developments : FY05 results
Housebuilder Barratt Developments reported flat turnover (£2,512.7m against £2,516m last year) and a 10% growth in operating profits (to £411.3m) for the year to June 2005. The number of houses built rose by 2% to 14,351 units, helped by a large increase in low cost units.
Excluding low cost houses, completions were down 1%, at 12,591 units at an average selling price of £182,100, up 5%. Social housing completions increased by 35% to 1,760, at an average selling price of £101,700, up 14%. In total, the UK average selling price rose 4% to £172,200.
While these figures are better than the average in the industry, there is a distinct slow down from the first half. In the first half the company reported a 5% increase in turnover and a 20% increase in pre-tax profits.
The company seems confident of its immediate prospects citing forward sales of £900m which, together with completions to date, secures 52% of full year sales. The company says its wide geographic spread in its business makes it less likely to be affected by a housing market slow down. While this may be partly correct, we believe the medium term outlook for housebuilders in the UK is not particularly good.
The share trades at 731.5p, on a prospective PE (2006 earnings) of 6.8x in line with the sector. The yield is 4%.
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