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Barratt posts higher profits but cautions on labour supply

Housebuilder says half-year profits rise 40% but says good supply of staff and materials is key

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Chief executive David Thomas said the group had taken on 880 new apprentices

Barratt Developments (LON:BDEV) reported higher profit and revenue but warned that future results depended on good supplies of labour, materials and land.

The house builder said pre-tax profit in the half-year to December 31 rose 40.3% to £295mln on a 19% increase in revenue to £1.87bn. It boosted the interim dividend to 6p from 4.8p previously.

It increased completion volumes by 9.4% and said the land market remained attractive with £559mln worth of plots approved for purchase.

Barratt also said the second half had got off to a strong start with 260 net private reservations per week and total forward sales rising 13.4% to £2.6bn against £2.3bn a year ago.

The figures are the latest positive news for the industry, which is benefiting from stronger demand fuelled by relatively low interest rates, rising prices and a national shortage of homes.

But economists have warned that housing supply needs to rise significantly if the generally buoyant market is to avoid overheating.

Barratt said there "remains a long term housing shortage of all tenures that can only be addressed through additional supply; we are committed to playing a leading role in addressing this issue without compromising our operational or financial strength."

It added that main risks and uncertainties facing the company and the industry included changes in the UK and continental European "macroeconomic environments", although it did not say if it believed this included the possibility of a UK exit from the EU in the forthcoming referendum.

Potential risks also included any inability to recruit and keep enough skilled staff and shortages of raw materials, subcontractors and suppliers.

Chief executive David Thomas said the group had taken on 880 new apprentices, trainees, graduates and undergraduates to expand its workforce.

"In the past five years we have increased our annual output by more than 53%, built more than 71,700 homes and approved the investment of over £4.4bn in new land for housing," he said.

"The market remains strong as a result of improved mortgage availability and government support for first-time buyers."

Quick facts: Barratt Developments

Price: 671 GBX

LSE:BDEV
Market: LSE
Market Cap: £6.83 billion
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