Bloomberg News

Barratt Says Home Sales Fell Amid ‘Challenging’ Conditions

July 14, 2011

(Updates with CEO’s comments from fourth paragraph.)

July 14 (Bloomberg) -- Barratt Developments Plc, Britain’s largest homebuilder by volume, sold 1.8 percent fewer homes in fiscal 2011 as it pursued margin growth over volume.

Barratt’s sales fell to 11,171 in the 12 months through June from 11,377 a year earlier, the London-based company said today in a statement. The average price climbed to about 204,000 pounds ($329,000) from 195,000 pounds, Barratt said.

The U.K. housing market is struggling to gain momentum as banks restrict lending, inflation squeezes households and government budget cuts limit consumer confidence. Unemployment claims rose last month at the fastest pace since May 2009, casting doubt on whether the economy is generating enough jobs to offset the deepest budget reductions since World War II.

“We don’t expect to see any significant change until there is a sustained improvement in the mortgage market,” Chief Executive Officer Mark Clare said on a conference call with reporters. “Volumes and pricing growth will inevitably be constrained.”

Clare said Barratt will report a “small” net loss for fiscal 2011. Analysts estimate the company made a loss of about 27.5 million pounds, according to the average of five forecasts in a Bloomberg survey. Operating profit excluding one-time gains and losses rose to about 135 million pounds from 90.1 million pounds, Barratt said.

The homebuilder fell as much as 2.9 percent to 108 pence in London trading and was down 2.3 percent at 9:45 a.m. The shares have gained 13 percent in the past six months.

Economy’s Weakness

A U.K. house-price gauge showed little improvement in June as the country’s “subdued” economic prospects crimped demand for real estate, the Royal Institution of Chartered Surveyors said July 12. Lloyds Banking Group Plc’s Halifax mortgage- lending unit said July 6 that home prices rose the most in eight months in June because of a shortage of properties for sale.

Barratt expects sales volumes to be the highest in about three years in fiscal 2012, Clare said. The company will sell as many as 10 percent more homes as it adds sales outlets across the country.

“If we assume the sales rates that we’ve achieved in the second half, which is more than normal, then we would expect to see growth in volume of 5 to 10 percent,” he said.

--Editors: Jeff St.Onge, Andrew Blackman.

To contact the reporter on this story: Chris Spillane in London at cspillane3@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.


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