Redrow upbeat about market despite dip in profit and turnover

Redrow has reported a slight dip in profit and turnover for the first half of the year amid “challenging” conditions, but says there are signs the market is improving.

The housebuilder, in its results for the six months to 1 January 2023, reported turnover of £1.03bn, slightly down on the £1.05bn reported for the same period last year. Pre-tax profit also dropped slightly by 2.4% from £203m to £198m.

The housebuilder said the new homes market “found itself in the eye of a storm” in the second quarter of its financial year, and the usual Christmas slowdown was effectively brought forward to October as a result.

It said: “The government’s disastrous mini-budget drove significant increases in mortgage rates during an existing cost of living crisis. Inevitably, consumer confidence was badly affected.”

Redrow as a result has now revised its forecast turnover for the full year down slightly from £2.1bn to £2.05bn, which would also be 4.2% down on the £2.14bn figure for the previous year.

However, it said early indications in 2023 are “better than anticipated and the market appears to be finding a new natural level”.

It said its net private reservation rates per outlet per week in the first weeks of the calendar year was 0.51, compared to 0.38 in the first half its financial year.

It said: “As the political and economic picture has stabilised, and mortgage rates continue to reduce from their elevated levels, consumer confidence has begun to show early signs of returning.

“Unique visitors to our website were up 17% during January 2023 compared with the previous year.”

Redrow has also maintained its interim dividend of 10p to shareholders despite the dip in profit.

Redrow said it is still experiencing rises in costs and expects cost inflation of 7% this year, but expects market competition to mitigate this.

The firm said it is still reviewing the contract for the developer pledge, under which housebuilders agree to pay for fire safety repairs on its own existing buildings going back 30 years.

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Michael Gove at the end of last month threatened to use powers to stop housebuilders trading if they don’t sign the contract within six weeks. Vistry, Barratt and Persimmon have confirmed they will sign the contract.

Redrow said: “At the time of writing we are reviewing the Government’s Long Form Agreement. It aims to legally formalise the industry-wide Building Safety Pledge, which Redrow signed in April 2022.

“This new document also widens builders’ responsibilities with regard to potential remediation work, which may need to be undertaken. Although this would mean an increase to our Building Safety provision, we don’t foresee this increase as being substantial”.