Barratt Developments PLC (LSE:BDEV) has reported a 15.9% increase in pre-tax profits at the half-year stage and improved reservation activity at the start of 2023, but cautioned that trading conditions remain challenging.
The housebuilder highlighted a strong operational performance in the six months to 31 December 2022, with 6.9% growth in total home completions to 8,626 and reported pre-tax profits increasing to £501.5mln from £432.6mln a year before.
Barratt said the full year out-turn remains dependent on how the market evolves through the Spring selling season, but assuming the improved reservation activity experienced since the start of 2023 continues, it expects to deliver total home completions of between 16,500 to 17,000.
The dividend was cut to 10.2p from 11.2p reflecting the planned reduction in dividend cover to 2.0 times for the full financial year but Barratt said a share buy-back programme would recommence following today's results announcement.
Barratt highlighted a strong balance sheet with net cash of £969.1mln, although this was down from £1,131.7mln a year ago.
Net private reservations per active outlet per average week from January 1 through to 29 January 2023 were 0.49, 45.6% below the 0.90 in the equivalent period in 2022, reflecting the more tentative demand seen in the calendar year to date, but an uplift on the level of activity seen at the AGM.
Forward sales as of 29 January 2023 were 10,854 homes compared to 15,736 a year ago at a value of £2,665.0mln (30 January 2022: £4,109.7mln).
In the half-year results, Barratt chief executive, David Thomas, said: “Consumer confidence weakened significantly during the half, which meant we saw lower reservation rates for future sales - particularly in the second quarter.
“Whilst we have seen some early signs of improvement in current trading during January, we will need to see continued momentum over the coming months before we can be confident that these challenging trading conditions are easing.”