Barratt Developments (LON:BDEV) said today that sales returned to “more normal levels” in the first half as market conditions improved, expecting substantially higher profits in H2.
The property developer and FTSE 250 constituent delivered 0.53 new private reservations per active site per week, lower than the 0.56 in 2010, but significantly higher than the 0.39 during the first half of the year.
In the interim management statement for the period from 1 January to May 8 2011, the group said that forward sales stood at £1.05 billion at the end of the period, slightly lower than the £1.07 billion a year ago.
“We are encouraged by the improvement in market conditions we've seen since the start of 2011, following a challenging autumn period. Our strategy for recovery is progressing well and we continue to expect a substantial increase in operating profit in our second half,” said chief executive of Barratt Developments Mark Clare.
“The successful refinancing provides a strong platform for the business and will enable us to reduce the effective cost of financing going forward,” he added.
The cancellation rate climbed from 13.7 percent in 2010 to 16.1 percent, which Barratt said was broadly in line with historic norms.
The group is expecting to open another 24 new sites on top of the 55 opened so far this year by the end of 2011, which it said should improve profitability and margin of the group.
Barratt has also announced that it has agreed a complete debt refinancing package, providing it with £1 billion of committed facilities to May 2015, some of which extend as far as 2021. The effective cost of borrowing will decline as the term debt being reduced from £903 million to £310 million.
The refinancing will be fully effective by the end of May.
The update was met with a positive response in the markets as shares in Barratt climbed 2 percent to 114 pence in early deals.