(Alliance News) - Barratt Developments PLC on Wednesday reported double-digit interim growth in both revenue and profit but warned of lower reservation rates early in 2023 due to "tentative" demand.
For the half-year that ended on December 31, the Leicestershire-based housebuilder said revenue rose 24% year-on-year to GBP2.78 billion from GBP2.25 billion. Pretax profit rose 16% to GBP501.5 million from GBP432.6 million, despite operating margin worsening to 17.8% from 19.3%.
Total home completions rose 6.9% to 8,626 from 8,067 a year earlier. Barratt said the strong half was due to its "significant" forward order book at the end of June last year.
However, it has seen lower reservation rates for future sales in the new financial year, particular in the second quarter.
Barratt said net private reservations per active outlet per week were 0.49 in January, down 46% from 0.90 in the comparative period last year. This reflects the more "tentative demand seen in the calendar year to date", it explained.
Forward sales as at January 29 were 10,854 homes at a value of GBP2.67 billion. This is down from 15,736 homes last year at a value of GBP4.12 billion.
"Whilst we have seen some early signs of improvement in current trading during January, we will need to see continued momentum over the coming months before we can be confident that these challenging trading conditions are easing," Barratt Chief Executive Officer David Thomas said.
The housebuilder cut its interim dividend 10.2 pence per share, a 8.9% decrease from 11.2p a year before. It said the payment was in line with its planned reduction in dividend cover to 2.0 times for the full-year from 2.25 times in the first half of financial 2022.
It added that its buyback programme will restart following Wednesday's interim results announcement.
Looking ahead, Barratt said the second half of financial 2023 remains uncertain, and reservation activity in February and March will determine whether any further planned actions will be required, but added that reservations have shown a modest uplift since the start of January, helped by "the tempering in both future interest rate and energy cost expectations, as well as the introduction of more competitive mortgage rates".
It expects to deliver total home completions of between 16,500 to 17,000 in the financial year ending on June 30.
Shares were up 0.5% at 462.60 pence each on Wednesday morning in London.
By Xindi Wei, Alliance News reporter
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