Barratt Developments PLC (LSE:BDEV) announced that it is trading in line with expectations with strong demand for its homes, and said it has taken measures that mean continued high cost inflation will have a neutral or positive impact on margins in the second half of the current year.
The housebuilder also called on the UK government to reconsider its plans to extend the scope of the Building Safety Levy. It termed the levy "unjust and disproportionate", saying it penalises UK builders who were not responsible for most of the historical buildings or issues requiring remediation, and fails to allocate the cost of remediation to those responsible.
In a trading update covering the period from 1 January to 1 May 2022, the company said the net private reservation rate rose by 12% to 0.93 per active outlet per average week. The increased reservation rate, alongside continued house price inflation, "reflects the strength of demand for our high quality, energy efficient and sustainable homes right across the country", the company said.
Total forward sales rose by 6.6% to stand at 15,821 homes, including joint ventures, as at 1 May 2022. The value of forward sales rose to £4.38bn from £3.69bn a year earlier. Barratt said it is now fully forward sold for the year to 30 June 2022.
Total total home completions in the year to date were 12,692, compared with 13,558 last year. Barratt said it is on track to deliver total home completions of between 18,000 and 18,250 for FY2022.
"We expect to deliver full-year trading results in line with the board's expectations as we remain focused on growing towards our medium-term target of 20,000 homes a year," said David Thomas, chief executive.
The company expects cost inflation of around 6% for the current year, but forecast a neutral impact on its margin.
"Overall, our improved fixed cost efficiency, through completion volume growth, along with the c. 7% sales price inflation within our forward sales position at the start of the second half, means we continue to expect the effect of build cost inflation on margin to be broadly neutral or positive for the second half of FY22," it explained.
The group had £735mln net cash on 29 April and £700mln undrawn revolving credit facility. It expects year-end net cash to be in line with previous guidance of between £1bn and £1.1bn.
Shares of the company rose 1.57% to 491.98p.