Redrow sees profit halving in 2024 as summer housing sales slump

UK housebuilder Redrow said it expected profits and revenue to halve next year as the housing market laboured amid higher borrowing and challenging conditions, with the company's weekly sales slumping over the summer.

The company said sales per outlet per week for the first 10 weeks of the new financial year were 0.34 compared with 0.61 a year ago.

"Following the macroeconomic volatility of the last financial year, as we go into 2024 the market remains challenging and uncertain. However, we believe we are well positioned to respond to the market as it develops," the company said in a statement.

Underlying pre-tax profits for the year to July 2 fell 4% to £395m, with revenue flat at £2.1bn. The total dividend was cut to 30p a share from 32p.

Redrow now expects sales in the year to July 2024 to come in at £1.65bn to £1.7bn, and pre-tax profits to be in the range of £180m to £200m.

"Cost of living and mortgage affordability continue to have a negative impact on the market. Where appropriate, we've used targeted sales incentives to convert buyer interest into reservations," said chief executive Matthew Pratt.

"Following several consecutive Bank of England base rate increases, we remain hopeful that, as inflation eases, we will see some stability in mortgage rates. The reduction in mortgage volatility will enable potential customers to progress the purchase of their home with financial certainty."

Pratt said Redrow's full-year average private reservation rate per week for the year was 0.46 compared to 0.68 in 2022, reflecting the macro-economic picture and the tougher sales market.

Reporting by Frank Prenesti for Sharecast.com