Homebuilder Barratt Developments has issued a strong trading update ahead of its annual results, citing a significant increase in consumer demand.
The firm, which was founded in Newcastle, said it has seen a significant increase in housing completions as the group responds to market demand.
Meanwhile the average selling price in the 12 months ended June 30 2014 has risen 13% in 2014 to around £22,000, up from last year’s £194,800, driven by the firm building more, larger homes in attractive locations and house price inflation.
Profits for the full year are now expected to be ahead of the top end of analysts’ estimates at around £390m – more than double the £192m profit before exceptionals posted in the previous period.
The firm said it is also continuing to secure excellent land opportunities across all regions, meaning the group is expected to exceed its ROCE (return on capital employed) target of 18% two years ahead of schedule.
Total forward sales are also up – by 44% at £1.2bn, compared to the previous period’s £829.7m
Total land purchases approved stands at 21,478, a significant increase of 15.9% on 2013 that amounts to £1.198bn.
The net cash balance at year end is expected to be £70m, a significant uplift on 2013’s net debt of £25.9m.
Commenting on the results Mark Clare, group chief executive said: “The market remains positive with strong demand for new homes across the country.
“The land we have acquired in the last five years together with our disciplined operating model is delivering a very strong business performance.
“Our focused approach to land buying will enable us to maintain a land supply of around 4.5 years and support a significant increase in profitability and return on capital employed.
Full year results will be announced on September 10 2014.