Barratt Developments pushed up profits by almost 9 per cent in the first half despite building fewer homes than a year earlier.
The UK’s largest housebuilder reported pre-tax profits of £321m in the six months to December 31, up 8.8 per cent, but said it built 7,180 homes in the period, a drop of 5.8 per cent from the previous year, due to a decrease in London where the housing market is slowing.
David Thomas, chief executive, said he expected overall new home completions to be flat for the full year after five years of double-digit growth.
“We’ve seen a very significant increase in our volumes over the past five years and have really worked hard to maintain our quality and our customer service,” he said.
Completions of new homes in London dropped 56 per cent to 367, a trend that Mr Thomas said was partly down to building schedules weighted towards the second half.
However, he added: “In our London business we have not purchased a site in zone 1 for nearly two and a half years. The reality is that sites that are closing, we are not necessarily replacing them with new sites opening so there is a reduction in site numbers.”
Outside the capital, Barratt built its largest number of new homes in nine years, at 6,813, slightly up from a year earlier. Forward sales across the country reached a record £3bn, up 17 per cent.
The FTSE 100 group said it would increase its planned dividend payouts to shareholders “given the significant operational and financial improvements the group has made over the past few years”.
It will pay out an interim dividend of 7.3p, up 22 per cent, and will cut the level of dividend cover on its ordinary payments to 2.5 times from 3, resulting in higher payouts to shareholders. It has committed to a special dividend of £175m for the full year 2018, echoing a similar payout planned for 2017.
The group’s shares rose 2.6 per cent to 528p in early morning trading.
Barratt’s London operation has suffered from a downturn in demand for high-end properties. It said on Wednesday it had sold 118 homes in Nine Elms, a large development area south of the Thames, to an institutional investor who would run them as a long-term rented development rather than selling. The overall drop in London completions helped to push down revenues by 3 per cent to £1.8bn.
Barratt also faces a Metropolitan Police corruption investigation in which its London chief, Alastair Baird, and three other people were arrested last year.
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