Barratt Expects ‘Significant’ Rise in Full-Year ProfitabilityChris Spillane
Barratt Developments Plc, the U.K.’s largest homebuilder by volume, predicted a “significant” increase in profitability this year prices rise and mortgage lending improves.
The operating margin widened to about 8.4 percent in the company’s fiscal first half through December from 6.4 percent a year earlier, London-based Barratt said today in a statement. The average selling price gained 2.1 percent to 185,000 pounds ($297,000).
“Mortgage lending should increase in 2013, supported by the Bank of England’s Funding for Lending Scheme,” Chief Executive Officer Mark Clare said in the statement. “We expect to deliver a significant improvement in profitability for the full year 2013.”
Lending for homes been slow to pick up as Britain’s economy continues to struggle and banks clean up their balance sheets following the credit crisis. The Bank of England’s Funding for Lending Scheme aids homebuilders by helping banks offer loans at more affordable rates.
Barratt’s revenue was little changed at about 950 million pounds in the fiscal first half. Home completions fell to 5,085 from 5,117.
U.K. homebuilders including Barratt have improved profitability by building on land bought cheaply after the financial crisis caused prices to tumble. The company said it expects about half of its home completions to be made on the less expensive land in the fiscal year through June.
Barratt has more than doubled in London trading in the last 12 months, making it the best performer on the Bloomberg EMEA Homebuilders Index. Taylor Wimpey Plc, the U.K.’s second-largest homebuilder by volume, was the second-best performer in the index with an 84 percent gain. The index was up 74 percent in the period.