Barratt beats profit forecasts but fears remain over future

A STRONG second-half performance helped full-year operating profit at housebuilder Barratt Developments to beat expectations, despite lingering qualms over the outlook for UK housing.

Britain's third-largest housebuilder by market value said it sliced nearly 1 billion off its debt pile during the year.

Barratt said it would report an operating profit of at least 85 million for the year to the end of June, giving the group an operating margin of 4 per cent.

Chief executive Mark Clare said: "There was a significant improvement in the operating performance in the second half, this has delivered results ahead of expectations in terms of operating profits, operating margin and debt reduction."

Keith Bowman, an analyst at Hargreaves Lansdown, added: "The combination of 'self help' and government assistance has allowed Barratt to emerge from the quagmire which the credit crisis created."

But the firm's strong trading update was tinged with caution as the UK knuckles down for another period of uncertainty.

UK consumer confidence in June fell to its lowest point in a year, as the outlook for the economy and household finances gets bleaker.

Clare added: "There continues to be the same uncertainty with mortgage availability and there is also economic uncertainty as a result of the new government. But we don't know how that will play out."

Weaker demand and increasing supply slowed British house price growth last month and pushed future price expectations to their lowest in more than a year, according to a survey from the Royal Institution of Chartered Surveyors. Figures from Halifax revealed that UK house prices fell by 0.6 per cent in June, the third successive monthly fall.

Barratt added that it would not follow in the footsteps of peer Bovis Homes and reinstate a dividend.