Barratt says strong H2 lifts year-end results

A builder works on a Barratt housing development in Coalville, February 27, 2008.

LONDON (Reuters) - House builder Barratt Development (BDEV.L) said a strong second-half performance helped its full-year operating profit beat expectations despite lingering qualms over the outlook for housing.

Britain's third-largest house builder by market value said it sliced nearly 1 billion pounds off its debt pile during the year, leading to shares rising more than 4 percent.

"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," Chief Executive Mark Clare said.

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

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

But the strong trading update from the builder on Wednesday was tinged with caution as Britain knuckles down for another period of uncertainty.

Consumer confidence in June fell to its lowest point in a year, according to a survey on Wednesday, as the outlook for the economy and household finances gets bleaker.

"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," said Clare.

NO PRICE DIP

Weaker demand and increasing supply slowed 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.

House prices fell by 0.6 percent in June, the third successive monthly fall, according to mortgage lender Halifax.

Housebuilders have reported a return to normal trading in recent weeks after the election and emergency budget dampened home buying appetite, but this was expected to continue to weigh on house price recovery in the second half.

House prices have rebounded by around 10 percent over the past year after sliding by as much as 20 percent since a peak in late 2007. Despite signs of the recovery tailing off in recent weeks, house prices are not expected to dip, according to a poll of analysts.

Barratt, one of the last large housebuilders to update the market on trading conditions, said its net debt stood at 375 million pounds compared with 1.28 billion this time last year.

Total completed sales fell to 11,377 from 13,202 a year ago, but the average selling price rose 11 percent to 174,000 pounds and leapt around 18 percent in the second half.

Barratt said it would carry nearly 592 million pounds of sales into 2011, 27 percent ahead of last year.

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

(Reporting by Lorraine Turner; editing by Rhys Jones and Michael Shields)