House builders are expected to announce strong results for the second half of 2011, defying the economic gloom with profit rises of as much as 50%.
In trading statements published last week ahead of half-year result announcements, Barratt Developments, Galliford Try and Persimmon reported that completions and profits were up and take-up of the government’s FirstBuy scheme was encouraging.
Barratt says its group operating profit for the six months to December 2011 is expected to be £61m, a 40% increase on the same period in 2010, while its total completions for the period were up 8% year-on-year at 5,198 units.
It says good progress is being made in the implementation of the government’s mortgage indemnity guarantee scheme for first-time buyers, for which it expects to see first completions in the spring, but adds that until the initiative is established, FirstBuy will remain an important sales tool.
Mark Clare, group chief executive of Barratt, says: “It has been another six months of good progress for our business despite the wider economic uncertainty.
“We have delivered a further increase in profits, brought debt to below expected levels and are starting 2012 with a much stronger forward order book.”
Meanwhile, Persimmon says it anticipates a 50% increase in underlying profit before tax for the second half of 2011, which it says will be towards the top end of analysts’ expectations.
Its trading update says: “Take-up of the government’s FirstBuy scheme has been encouraging.
“As a resultwe have completed more starter homes in 2011 and the group’s average selling price is therefore 2% lower than the previous year at £164,000.
“Completions of new homes in the second half of the year were 4% higher than for the previous year at 4,921.”
In addition, Galliford Try is anticipating a 59% year-on-year rise in total completions to a record number of units at 1,352.
Greg Fitzgerald, chief executive of Galliford Try, says:”The board has been encouraged by the progress in house building as our southern biased business performed strongly despite the general economic uncertainty.
“The spread of long-term work in the group’s construction business is underpinning its resilience in challenging market conditions.”