UK housebuilder Redrow eyes profits improvement
British housebuilder Redrow forecast higher annual profits today before warning the rest of this year was likely to see static prices and a competitive market.
Figures for the financial year to yesterday showed Redrow increased its number of legal completions by 2% to 4,372 while average prices rose 11% to £172,000 (€254,000).
It told the London market that its profits for the year were expected to be ahead of last year, with analysts looking for a figure of £138m (€203.7m), compared with £124.1m (€183.2m) a year earlier.
Redrow said it had benefited from starting the year with a strong forward order book, which it added today still remained ahead of the “historic norm”.
The company is braced for a tougher year with operating margins likely to slip back to around 17%, a level seen as “sustainable” by management.
It added: “The underlying macro-economic position remains supportive but consumers are generally cautious at present.
“However, delayed housing transactions will gradually increase pent-up demand and affordability will improve as time passes. This will further be supported if interest rates begin to fall.”
The trading update revealed it was likely the market would show signs of improvement in the spring of next year, although in the meantime prices were likely to be “static” and the market competitive.
Despite the toughening conditions, Redrow said turnover for the six months to June 30 was expected to be 6% higher at £380m (€560.8m), following a 7% rise in average selling prices and broadly similar level of completions.
As a result of the current housing market, Redrow said the full year operating margin for the homes division was likely to be “marginally lower” than the 19.8% achieved in the previous financial year.
The company also announced a boardroom reshuffle with chief executive Paul Pedley becoming deputy executive chairman with responsibility for piloting major land transactions. His post will be taken by group managing director Neil Fitzsimmons.
