Shares in the major housebuilders traded higher after positive results and an increase in earnings guidance from their smaller rivals Redrow (RDW) and MJ Gleeson (GLE), bringing some relief to beleaguered shareholders.
Redrow shares gained 2% to 637p after issuing new forecasts for its 2024 financial year while MJ Gleeson shares were 1% higher at 733p after the firm said results for the year to this June would be ahead of market expectations.
STRONG PRICING
Redrow posted record first half revenues of £1.05 billion due to an improved sales mix and higher house price inflation, which it said ‘continues to exceed build cost inflation’, for the time being at least.
Thanks to better pricing the firm’s operating margin hit 19.5% a year ahead of target, driving 17% growth in earnings per share and an increase in the interim dividend to 10p per share with a payout of 20p per share scheduled for the final dividend.
For the financial year from July 2023 to July 2024, Redrow raised its revenue forecast from £2.2 billion to between £2.3 billion and £2.4 billion and increased its earnings target from 90p per share or greater to 92p per share or greater.
Chief executive Matthew Pratt said the firm had made ‘a positive start’ to the second half and was ‘delivering against our strategy’ with the average private reservation value reaching £367,000 excluding a bulk deal in London against £301,000 in the same period a year ago.
STRONG DEMAND
Affordable housing champion MJ Gleeson also enjoyed a jump in prices with the average sale netting £161,200 in the half year to December compared with £140,600 in the same period the previous year.
The firm also benefitted from the sale of three plots of land for a total of £23.3 million compared with proceeds of just £8.2 million the previous year, despite selling more plots.
Demand for the group’s much-needed affordable homes ‘continues unabated’ according to chief executive James Thomson, and despite a sclerotic planning market and higher input costs the firm sees full year earnings beating market estimates.
