Housebuilder Barratt Developments (BDEV) gained 1.3% to 775.4p as it lifted 2021 expectations on a modest increase in volumes.
The ‘modest’ beat comes as the firm targeted completion on between 16,000 and 16,250 homes and aimed to deliver around 650 joint venture home completions.
For the period from 1 January 2021 to 2 May 2021, the net private reservation rate increased to 0.83 from 0.52 per active outlet per average week year-on-year.
The company said it expected its net cash position to increase by the end of the year and this looked set to help underpin land acquisitions - with the green light expected on 14,000 to 16,000 plots in 2021 rising to 18,000 to 20,000 plots in 2022.
‘EXTRAORDINARY’ RECOVERY
As AJ Bell investment director Russ Mould observed this ‘should have positive implications for the profitability of future developments’.
Mould added: ‘A combination of pent-up demand from lockdown and the stamp duty holiday has stoked an extraordinary post-Covid recovery in the housing market, where the key question is whether or not the good times can continue once state support is dialled back.’
One fly in the ointment for Barratt is rising input costs, reflecting growing inflationary pressures. Though the company expects the current 3% increase in build costs to moderate to 1%-2% over the course of the year as a whole.
Canaccord Genuity analyst Aynsley Lammin commented: ‘Today's solid trading update confirmed that demand remains strong and build rates have been better than expected. Consensus pre-tax profit could move up by 2%-4% for 2021 on better completions but after some extra costs. Overall, a very solid update.’
