Shares in Barratt Developments were up on the FTSE 250 in morning trading after the company said its operating profit for the full year ended 30 June would be ahead of expectations at over £85 million.
The housebuilder said that it had made 11,377 completions in the year, of which 6,324 came in the second half of the year.
The average selling price for houses in the full year rose by around 11 per cent to £174,000, while in the second half of the year the average price increased by 18 per cent, thanks mainly to changes in the mix of housing.
Net private reservations were reported as being up 4.2 per cent at 0.50 per week per active site. Forward sales increased 27 per cent to £591.7 million as of 30 June.
Barratt said that its net debt at the end of the year was significantly lower than previous guidance, coming in at £375 million.
Since the middle of 2009, when it re-entered the land market, Barratt said it had agreed terms for £527.2 million of land purchases, most of which will be acquired on the basis of deferred payment.
The group said that the housing market was likely to remain challenging due to limited mortgage lending and added that it faced some uncertainty due to possible cuts in government funding.
Mark Clare, Group Chief Executive of Barratt Developments, said, "In the last six months we have driven a significant improvement in operating margin, delivered a profit for the Group, and reduced debt levels by around £230m. This improved operating performance, combined with our success in agreeing terms on higher margin land means that the Group is well positioned to secure further margin growth in what continues to be a challenging market."
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers, commented,
"The combination of 'self help' and government assistance has allowed Barratt to emerge from the quagmire which the credit crisis created. Forward sales are up, cancellation rates have fallen, whilst a move away from the overdeveloped apartment market has largely provided for an increase in the average sale price. Group finances have been resuscitated, while the group, like rivals, has recommenced the buying of land.
"However, a near 30pc share price underperformance against the wider FTSE-250 index over the last 6 months continues to tell its own story. Mortgage availability remains constrained, with new FSA proposals potentially adding to the difficultly, whilst changes in planning regulations and the uncertainty created by pending public spending cuts provide further hurdles.
"Nonetheless, for now, with the full weight of interest rate policy behind Barratt and the wider industry, and valuations undemanding on a historical basis, market consensus opinion continues to denote a buy."
By 09:17 shares in Barratt Developments were up 3.33 per cent to 108.50 pence per share.