Barratt looks to black

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The UK’s largest volume housebuilder said a return to profit during the first six months of the year would give it “the best defence possible” against takeover bids from a rival.

Barratt Developments said it was on track to post its first profit for two years after the “slow motion” revival in the property market had pushed up house prices and sales volumes.

Mark Clare, chief executive, said he expected the London-based company, which was the subject of speculation surrounding a possible bid from rival Persimmon, to bounce back into the black, having fallen to a £178.4m ($265m) loss at the year end.

“We are running the company to drive performance and not looking over our shoulder. The best defence against predators is to make the company more successful,” Mr Clare said.

“Nobody is saying we have turned a corner, but the underlying factors which drive the market are getting better bit by bit. It is almost as if the country is becoming more positive in slow motion,” Mr Clare added.

Housebuilders have seen their stocks come under pressure since last week’s inconclusive general election and the prospect of a hung parliament led to fears about the prospects of the sector’s recovery.

However, Barratt said the political uncertainty of the past few days had not effected the recovery and that it expected the new coalition government would continue to put pressure on banks to ease the mortgage market.

The group completed just over £1bn of forward sales during the three months to April, up 32 per cent on the same period last year. Meanwhile, its focus on building houses rather than apartments helped boost the average selling price by 14 per cent.

Aynsley Lammin, housebuilding analyst at Citigroup, said the recovery was steadily building momentum, but that fears of a double dip recession had not abated.

Shares in Barratt, which have risen almost 400 per cent since the market slumped in July 2008, rose 6p to 122½p by mid-afternoon trading on Wednesday.

● Balfour Beatty, the UK’s largest construction company, said a strong run of contract wins since the start of the year had boosted its order book.

The company said the value of contracts for future work stood above £14bn under order at the end of 2009, many of which came through the public sector.

However, with concerns growing about the impact of government spending cuts on the construction industry, Balfour said it was looking for opportunities on privately financed building projects.

Shares in Balfour rose 8.8p to 272½p.

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