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Barratt sees strong market as annual profits rise

Barratt said the fundamentals for the market remained very positive

Barratt sees strong market as annual profits rise
Housing industry continues to face shortages of skilled workers

House builder Barratt Developments (LON:BDEV) reported a buoyant market outlook as it posted a 45% rise in annual profits.

Barratt said the fundamentals for the market remained very positive with strong demand for new housing across Britain.

But the group cautioned that the building and construction industry continued to face a shortage of skilled workers.

It said it was undertaking its own training initiatives and was continuing to support the wider industry in efforts to address the skill shortage.

Economists have also warned against euphoria in the industry, saying a price crash is still possible as housing supply fails to keep up with demand.

Barratt acknowledged the housing shortage, but it said it increased completions by 11% to 16,447 during the year, "overcoming a number of well publicised housing market challenges, particularly labour shortages".

The group said the new financial year had begun well with strong forward sales and good progress towards the group's 2016/17 targets of at least a 20% gross margin and at least a 25% return on capital employed. 

Net private reservations per week rose 14.7% to 257 versus a year ago.

Profit before tax increased by 44.8% to £565.5mln against £390.6mln a year ago. Revenue lifted 19.1% to about £3.8bn.

The company's private average selling price increased by 8.7% to £262,500 against a year earlier, driven by further changes in mix and house price inflation.

The total ordinary dividend per share rose by 46.6% to 15.1p.

Chairman John Allan said: "Against this strong market backdrop we are delivering ongoing improvements in our own performance."

Quick facts: Barratt Developments

Price: 665 GBX

LSE:BDEV
Market: LSE
Market Cap: £6.78 billion
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