Redrow sees FY profit ahead of market views

FTSE 250 housebuilder Redrow said on Tuesday that thanks to a strong performance, it now expects pre-tax profit for the year to be above the top end of analysts’ estimates, which currently stand at £240m.

The company said it saw no impact on house sales or visitor levels in the run-up to the EU referendum.

“Although it is too early to tell whether Brexit will have any effect on future sales, initial feedback is that sites remain busy, reservations continue to be taken and, indeed, we witnessed long queues and strong reservations at new sites launched last weekend.

“The fact remains that there is a long term underlying demand for new homes following decades of under supply. This chronic shortage of housing leaves market fundamentals unchanged.”

In a surprise trading statement ahead of the annual results on 6 September, Redrow said the market for new homes remained strong throughout the period as the mortgage market continued to improve.

The private order book at the end of June 2016 was up over 50% from last June at £807m, while the sales rate for the financial year was 0.68 per week, in line with 2015.

Turnover was up 20% to a record £1.38bn over the year as the number of homes legally completed rose 17% to 4,716, with private completions 12% higher at 3,882. Meanwhile, the average selling price of private homes increased to £328,500 from £297,300.

Shore Capital said: “Redrow rarely makes trading updates and this is a surprise announcement but looks to be prompted by strong trading and the recent steep fall in the shares.”

“We think the selloff across the sector has probably run its course and there are pockets of value now appearing, of which Redrow appear to be on,” the brokerage added.