Barratt Developments PLC (LSE:BDEV) raised its guidance for home completions for the current year to 18,000-18,250, an increase of 250 homes compared with its previous forecast and higher than the number delivered in pre-pandemic 2019.
The upbeat forecast may ease some concerns of a slowdown in the housing market, after the Bank of England last week raised interest rates for the second time in two months due to rising inflation.
In its earnings statement, the housebuilder said total forward sales grew by 9.1% in the first half to end-December 2021 to 14,818 homes, at a value of £3.7bn, up from £3.2bn, reflecting continued strong demand for housing.
It reported a strong rebound in building activity in the first half with 341 construction equivalent homes built each week, a rise of 14.4% on the same period in the previous year.
Completions fell by 11.1% to 8,067 in the half-year period, reflecting unusually high completions the year before due to COVID-19 lockdown dislocation. In addition, the seasonal phasing of completions has returned to a more normal pattern, the company noted.
It reported pre-tax profits of £432.6mln for the first half, up from £430.2mln, and raised its interim dividend to 11.2p per share from 7.5p.
Barratt said the strong demand for housing continued into the second half, with forward sales at the end of January standing at 15,736 homes at a value of £4.1bn, compared with 14,289 homes at a value of £3.4bn a year earlier.
It noted that 11,362 homes of these total forward sales have either exchanged or contracted.
The company said total build costs increased by around 5% in the half year. It expects this figure to rise to 6% for the full year, reflecting strong inflation across the economy and higher building material costs related to supply constraints. However, rise in costs is expected to have a neutral or positive effect on margin in the second half.
Net cash stood at £1.13bn at end-December, compared with £1.1bn a year earlier.