In a trading update for the year ended June 30, the company said it completed a total 17,856 homes, compared to 17,579 last year.
That included 17,111 of wholly-owned completions, up 2.6% on the previous year, and joint venture completions of 745, down 17.1%.
The operating margin rose to 18.9% in the year from 17.7% in 2018, supported by the decision to buy sites with higher margins and refinements to new housing ranges.
The disposal of legacy commercial assets and the reversal of inventory impairment provisions also added 50 basis points to the margin.
Average selling prices fall
However, the average selling price for the year fell to £274,000 from £288,900 due to change in the mix of completions.
Affordable home completions were up 10.4% to 3,578 while private home completions increased 0.7% to 13,533.
The average selling price of affordable homes rose to £131,000 from £123,700 but private home prices dropped to £312,000 from £328,000.
Barratt said its joint ventures delivered a better-than-expected profit of £35mln, compared to £18.6mln last year, mainly due to gains on land sales.
Profit to beat expectations
The company expects total pre-tax profit for the year to exceed analysts’ estimates, rising to £910mln from £835.5mln in 2018.
Following a slowdown in the central London housing market, Barratt has been focusing on building in areas outside the city.
The group has 18 private homes due for completion in its wholly-owned central London portfolio, compared to 145 last year.
As part of its strategy to move outside of central London, the firm sold its 50% stake in the Aldgate Place development to its joint venture partner. It now has two active central London joint ventures -- one at Fulham Riverside and the other at Nine Elms.
Barratt ended the year with net cash of £765mln, down from £791.3mln last year but ahead of guidance.
Forward sales rise
It had total forward sales, including joint venture, of 11,419 homes worth £2.6bn, up from 10,155 homes at £2.2bn last year.
Looking ahead the company said it remains focused on further margin improvements and delivering its medium-term targets of volume growth of 3-5%, land acquisition at a minimum 23% gross margin and a minimum 25% return on capital employed.
“Whilst there remains some economic and political uncertainty, the group is in a strong position,” Barratt said.
“We have a substantial net cash balance, a well-capitalised balance sheet, a healthy forward sales position, a continued focus on delivery of operational improvements across our business and an ongoing commitment to deliver the highest quality homes across the country.
“We believe that this gives us the resilience and flexibility to react to potential changes in the operating environment in fiscal year 2020 and beyond.”
In morning trading, shares were little changed at 576.2p.
Barratt remains a well-run business, says Peel Hunt
Peel Hunt maintained a 'buy' rating and target price of 630p as it raised its forecasts for 2019 by 2%.
"The group’s margin story has been a key differentiator over the last 6-12 months especially as others have been hit by quality and leasehold concerns," the broker said.
"While a chunk of the value gap has now been closed, Barratt remains a well-run business."