Barratt lifts dividend as profits surge: Housebuilder forecasts 7% average price rise in 'sustainable recovery'
Sir Lawrie Barratt, chairman since he came out of retirement three years ago, said he expected housing transactions to rise by about 10 per cent this year and forecast a 7 per cent increase in average prices, with a 10 per cent rise in the South-east leading the recovery.
'The slight strengthening of the UK housing market during 1993 should be fully sustainable, with affordability the best today for over 20 years,' Sir Lawrie said.
In the core UK housebuilding operation, all regions increased their contribution with the South in profit for the first time in five years. Two new regional divisions, in north and south London, were set up last July.
There were 2,302 legal completions during the half-year compared with 2,017 in 1992. The average selling price fell from pounds 75,800 to pounds 74,600 reflecting a change in product mix rather than an underlying slip in price.
Sir Lawrie said that the company was on course to complete 5,750 houses this year and to achieve a target of 8,000 completions by June 1996. Pre-tax margins of 5.2 per cent during the half-year are forecast to double to 10 per cent during the three-year recovery period.
Land acquisitions, designed to keep Barratt's land bank at two- and-a-half years' building, added 4,593 plots in the first half and stocks amounted to more than 15,000 plots at the end of December.
Barratt spent pounds 66m on land in the first half at an average cost of pounds 14,457, representing just under 20 per cent of the expected selling price. Despite the expenditure, gearing fell from 45 per cent to 27 per cent during the year.
In the US, the loss from the depressed Californian operation was reduced from dollars 1.7m to dollars 700,000. Completions more than doubled to 265 at an average cost of dollars 214,000.
The funds generated by the Californian operation with the sale of the remaining pounds 6m of commerical properties in the UK, are marked for further UK land purchases.
Pre-tax profits increased from pounds 4.8m to pounds 11.3m from sales of pounds 218.2m ( pounds 174m). Earnings per share were 4.4p (2p) and the interim dividend doubled from 1p to 2p.
The shares, which have more than doubled over the last year, were unchanged at 256p.
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