Barratt due to announce a return into the black
HOUSEBUILDING giant Barratt Developments should announce a return to the black this week as the property market show further signs of recovery.
The Newcastle-based company’s annual results statement on Wednesday will be closely watched to discover its views on the prospects for the troubled sector.
Expected pre-tax profits of £38.2m for the year to June 30 – against a £144m loss in 2009 – will be welcome but nerves are growing amid concerns that the temporary recovery in house prices is running out of steam.
The profits, albeit a fraction of the £451m made by the group in 2007, have been driven as much by cost-cutting and a change in the building mix towards houses as improvements in the underlying market.
Meanwhile, constraints on mortgage lending as well as looming spending cuts are likely to mean conditions remain challenging, the firm said in July.
Barratt’s forward sales were up 27% to £591.7m as of June 30, and it completed 11,377 homes over the year.
It expects completions to grow by up to 10% this year, but is concentrating on price rather than volumes, reflected by a further shift towards houses to account for nearly two-thirds of volumes.
Chief executive Mark Clare – who led the firm’s ill-timed purchase of Wilson Bowden in 2007 at the peak of the market – should at least have better news to report on the firm’s finances.
Debt stood at £375m as of June 30 – down from £1.27bn a year earlier.
There will also be news from the retail sector as Home Retail Group, owner of Argos and Homebase chains , reveals whether consumer sentiment is waning in its first update since the Government’s deficit-busting Budget was announced. The group, which has 747 Argos stores and 347 Homebase stores, reported a bigger- than-expected slump in sales in the 13 weeks to May 29, due to weak demand for video games and televisions.
The firm will be hoping for a bounce- back from a dismal first quarter, which saw like-for-like sales down at Argos and Homebase 8.1% and 1.4% respectively.
Home Retail previously said it was hopeful it will maintain profits on last year, which came in at £230m, in the year ending February.
And JD Wetherspoon is expected to show a resilient performance in its full-year results on Friday after a World Cup boost and longer opening hours offset the impact of tax and duty increases.
The pub chain saw mixed sales growth in the year to July 25, with revenues dropping in the first half of the year, before picking up again in the early summer. It is expected to turn in pre-tax profits for the financial year ending July 25 of £72m, compared with £52m last year on revenues of £996m, compared with £955m last year.
The UK’s fourth biggest supermarket, Morrisons, is expected to sketch out new avenues for growth when it reports interims on Thursday, including a potential long-awaited move into online grocery.
Bradford-based Morrisons – which has seen the fastest growth among the Big Four this year – is set to post a 14% rise in underlying pre-tax profits to £409m in the first half, but attention will be on new chief executive Dalton Philips’s plans for the business.
Analysts will be awaiting his strategic assessment of the grocer now he has his feet under the table and hints on a new direction following the departure of former boss Marc Bolland to Marks & Spencer.
