Feeds/newsletters
Barratt: trading statement
Housebuilder Barrat reported an increase in legal completions for the half year to December 2005, despite “testingâ€? trading conditions. The growth in completions was mainly in low-cost units termed ‘social housing’.
Total legal completions rose 2% to 7,003 units, at an average selling price of about £165,000, similar to last year. Private completions (as opposed to social housing) declined by 1% 5,569, at a slightly increased selling price of circa £180,000 (up 1%). Social housing completions increased by 14% to 1,434 at an average selling price of around £106,000, a similar level to last year.
Margins are said to have been stable, despite higher levels of sales incentives and marketing costs due to savings elsewhere.
The company claims that there are signs that buyer confidence has returned in the last three months but we view the 13% drop in the order book (to £700m; last year it was:£803m) as a sign of the continuing slowdown in the market.
With 75% of current year sales secured there is little doubt that Barrat can meet the current year’s expectations but it is the growth prospects that worry us.
The share trades at 949p, on a prospective PE (2006 earnings) of 8.3x, within the sector range with a yield of 3.4%.