Redrow FY profit jumps amid strong demand, hikes dividend

Redrow surged on Tuesday as the FTSE 250 housebuilder reported a jump in pre-tax profit for the full year as revenue grew and the company lifted its dividend.

For the year to the end of June, pre-tax profit was up 23% to £250m on revenue of £1.38bn, up 20% from the year before and the company hikes its full-year dividend to 10p from 6p.

Legal completions rose 17% to 4,716, spurred by the Help to Buy scheme, and the owned and contracted land bank at the end of June was up 43% to 26,000 plots.

Meanwhile, the average selling price rose 7% to £288,600.

The group said two key measures of its performance, return on capital employed and return on equity, improved to 24.2% from 22.8% and to 26.8% from 26.4%, respectively.

The company said demand for new homes was strong throughout the year, with growth in output benefitting from the government's Help to Buy scheme, which has continued to be a major support not only to Redrow but to the industry as a whole.

Activity in Central London remains sluggish, but Redrow pointed out that its exposure is very limited and all other areas in which it operates – including Outer London – have shown strong growth. The group added that it has seen “very little impact” as a result of Brexit.

Chairman Steve Morgan said: “I am delighted to report that for the third consecutive year Redrow has delivered a record set of results.

“Redrow entered the new financial year with a record private order book of £807m, up 54% year on year. Sales in the first 10 weeks are very encouraging and up 8% on a strong comparator last year. Our strategy of continued growth for the business is on track and I am confident this will be another year of significant progress for Redrow."

Numis said the full-year results were good, with pre-tax profit of £250m marginally ahead of the brokerage’s £247m forecast, while current trading is strong.

“Whilst Redrow's shares have recovered much of the reduction seen post Brexit and now only trade around 10% below 23/06, they still look good value. Furthermore, we believe that the lower end of consensus expectations looks too low and will need to move up significantly for the current year.”

At 0938 BST, Redrow shares were up 7.3% to 412.20p.