Housebuilder issues first trading update since merger approved
Barratt Redrow’s post-merger consolidation is expected to result in the closure of nine divisional offices across the country.
The housebuilder announced on Monday (21 October) a collective consultation on the proposed closure of five divisional offices.
In its first trading update as a combined group, published this morning, the firm said it anticipated that its integration programme would ultimately result in an overall reduction of nine divisions, with activities re-aligned across 32 divisions.
It said work to integrate the two firms was underway and claimed it would deliver at least £90m of cumulative synergies by FY28.
Changes to the divisional office structure is expected to account for 37% - or £33m - of this, while procurement related savings are set to deliver 38% (£34m).
The remaining 25% (£23m) is expected to come from consolidation of duplicated central and support functions, which it said would include the rationalisation of board and senior management positions.
It said that the integration process would also deliver “revenue synergies from 45 incremental sales outlet openings through until FY28”.
Barratt formally acquired Redrow on 21 August and received final clearance from the Competition and Markets Authority on 4 October.
David Thomas, chief executive, hailed “an exciting new chapter” for the business and said it was “uniquely well-positioned to meet the need for new homes” across the UK.
In the period from 1 July 2024 to 13 October 2024, the housebuilder reported that Barratt’s standalone private reservation rate had risen 31.9% to 0.62.
The joint business’ private reservation from 22 August to 13 October, 36.7% ahead of the pro-forma equivalent in FY24.
Total home completions for Barratt Redrow is expected to between 16,600 and 17,200 for FY25.
Thomas said that while customer demand continued to be “sensitive” to the wider economy, it was “beginning to see more stable market conditions” as a result of increased mortgage availability and affordability.
“It will take some time for customer confidence to fully recover from the macroeconomic headwinds faced over the past two years, but we are encouraged by the solid trading we have experienced over recent weeks,” he added.
No comments yet