- Revenue almost flat despite lower volumes
- Strong demand for affordable housing
- Outlook assumes weak sales rate continues
Investors in house builder Redrow (RDW) will be breathing a sigh of relief after the firm posted resilient results for the past year, including an almost-flat dividend, and reinstated its financial guidance for the current year.
The shares moved up 3% to 488p, roughly in the middle of their trading range of 440p to 520p so far this year.
STRONG PERFORMANCE IN AN UNCERTAIN MARKET
For the 12 months to the beginning of July the company completed on 5,436 new homes, 5% fewer than the previous year, but revenue was almost flat at £2.13 billion thanks to better pricing.
Revenue from private houses dipped 2% to £1.6 billion on an 11% fall in volumes, while revenue from private apartments slid 22% to £181 million on a 14% decline in volumes as the firm ran down its London business and sold more flats outside London at a lower price.
The Heritage Collection, which combines traditional styling with all-mod-cons including heat pumps and underfloor heating on detached homes and is pitched at the home-mover segment, continues to be the mainstay of the business, with average selling prices up 9% to £473,000.
Affordable housing sales outperformed, increasing 25% by value to £258 million and reaching 27% of completions demonstrating the huge demand for first-time homes.
Underlying pre-tax profit was down 4% or £15 million to £395 million, but the firm set aside 20p per share for the final dividend bringing the full-year payout to 30p against 32p, which will have pleased investors who own the shares for the income.
Net cash, after dividends and the previous £100 million share buyback, was still a healthy £235 million, and after nearly £200 million of exceptional charges for fire safety provisions in the 2022 financial year there were no further one-offs last year.
NEW GUIDANCE, SAME DIFFICULT CONDITIONS
‘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’, commented 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.’
After private sales averaged 0.46 units per outlet per week up to July against 0.68 the previous year, in the first 10 weeks of the new year that rate dropped to just 0.34 per outlet per week.
Nevertheless, the firm is guiding analysts and investors to expect revenue this year of between £1.65 billion and £1.7 billion, based on last year’s sales rate, pre-tax profit of between £180 million and £200 million, and a total dividend of 14p per share.
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